Divorce property division is one of the hottest legal issues family lawyers encounter – often second only to child custody. When Maryland divorce law kicks in, it gets complicated and nasty.
So, before you start claiming the house goes to you and offering the doghouse to your ex, let’s go over:
- How assets are divided in a divorce, particularly in Maryland;
- The types of assets that can and can’t be divided; and
- How you can protect yourself from poor asset division in a divorce.
Asset and Property Division in Maryland Divorces
In a Maryland divorce, assets are not necessarily divided equally between spouses.
That’s because in legalese, “equal” and “equitable” have different meanings.
- “Equal” means that property is distributed evenly between two individuals. So, if a court were trying to divide $20,000 equally, then each party receives $10,000 — regardless of who earned what.
- “Equitable” means that property is divided fairly in the eyes of the court, according to the circumstances of a particular case. So, a slightly different type of divorce may have that same starting $20,000 of marital assets divided as $15,000 to a wronged party in an at-fault divorce and only $5,000 to the opposing. This distribution could be considered legally “equitable,” but not “equal.”
Maryland specifically uses an equitable distribution division scheme, which requires the court to consider the circumstances of a divorce case when dividing property.
Compare this to neighboring states, which often use a communal property principle in court: All assets possessed by the previously married couple are divided equally between the parties.
Considering the circumstances of the divorce often causes property to be divided equally. However, there are some cases which will cause uneven and unpredictable distributions.
One of the more common ways for equitable-but-not-equal property distribution to appear in divorce court is for a party to file a contested, rather than uncontested, divorce.
Contested Divorces, Uncontested Divorces, and Property Divisions
In general, there are two broad types of divorces: Contested and uncontested.
In contested divorces, a Maryland judge largely decides what is fair in a case, making judgements and delivering outcomes for both parties.
This type of divorce is especially useful when both parties can’t agree – or one party is making life especially difficult. Having an official third-party “referee” decide for both of you can take stress off a situation, but it does take longer and cost more in legal fees.
Uncontested divorces, put simply, are completed by creating an agreement with the other party – and the help of experienced attorneys – and bringing it to the courts for approval.
Once the agreement is submitted, a judge will determine whether or not it is fair, and rule accordingly.
Uncontested divorces can be advantageous because they put the power of dividing assets in your hands. When you go to court to allow a judge to decide who gets what, it might result in legally binding orders that make everyone unhappy.
By doing much of the work out of court, you and your ex may make compromises that are helpful for everyone – without spending as much of those marital assets as you might have otherwise.
What Property Can (and Can’t) Be Divided During Divorces
Divorces typically consider two types of property: “Marital” and “separate.”
Marital property is generally considered to be anything you acquired from the day you were married forward. This type of property may be divided between you and your spouse during the divorce.
Generally, “separate” property is anything one party personally owned before a marriage. Separate property is generally not be divided in a divorce.
However, determining what’s marital property and what’s actually separate can be difficult to determine from a legal standpoint.
Let’s take retirement accounts as a quick example. If you started the account before you were married, your ex may still be entitled to part of the base assets and any earnings gained during the marriage.
Or, let’s say that you inherited an RV prior to marriage. Even though it was acquired before the marriage, thus remaining “separate” from the marital assets, it may still be eligible for equitable division depending on how it was used.
Did your family use it for summer vacations? Were funds from shared marital accounts used for upkeep? Then, that “separate” property may all of a sudden be considered a “marital” asset.
Though courts may order the transfer of almost all assets from one spouse to another – including retirement funds – there is some property that cannot be transferred in any situation. For example, real estate or stocks cannot typically be transferred by court order from one spouse to another.
However, either can be used to repay one of the parties their court-mandated value as part of the divorce decree.
For example, if the court orders alimony or child support from one party, then that party can use their real estate or stocks to pay for those court orders.
Practically speaking, then, all property can be at risk during a divorce – at least, without proper planning.
How to Protect Yourself and Your Property During a Divorce
One of the best ways to protect yourself when it comes to asset division in a divorce is to get informed. Reading this blog – and many other resources offered by a variety of people – is a good place to start.
Understanding the divorce laws that apply to your case will not only open more options to you, it will also take some fear out of the process.
Another basic way to get control of the divorce process and possible property divisions is to make lists – lots of lists – and collect documentation. Figuring out what you have, what it’s worth, and when you got it will save you and your lawyer a ton of time when it comes to negotiations.
Ideally, you should know:
- Any and all bank accounts owned by both or either parties going back as far as you can, including types and asset amounts;
- Any credit cards open by you or the other party, as well as statements on what was purchased, when, and by whom;
- Any debts, loans, liens, or other financial obligations, incurred either personally or mutually, before and during the marriage;
- Any real estate or vehicles, from actual real estate to the duck boat you inherited from your grandfather, along with current market value for the items;
- Any jewelry, antiques, artwork, or other valuable property items – one of our attorneys recently priced out a jewelry chest as part of his client’s divorce case; and
- Any retirement accounts or pensions, including 401ks and possible military pensions.
The more you can organize your files before going to the courts, the less stressful the entire process will be for you. If you’re having trouble, forensic accountants can help you figure out where everything is and how to tally it.
Finally, do not start moving around funds to “hide” assets or stop paying for family financial obligations.
- Do not drain the family bank account into a personal account, especially if that account pays for ongoing bills like rent, mortgage, or utilities.
- Do not start gifting expensive items to friends and family, knowing that you intend to file for divorce.
- Do not intentionally rack up debts on family accounts, thinking it’ll be divided between you and your ex during the divorce settlements.
Chances are high that you’ll be caught, and Maryland judges don’t take kindly to those sorts of shenanigans. You may ultimately lose more funds than you would have otherwise as part of a more punitive “equitable” judgement.
Divorces are extremely complicated, and there are very few rules that apply to every case. Your divorce case will be unique in many ways, and you may find it difficult to know which decisions you should make in relation to the smaller details of your case.
Fortunately, an experienced divorce attorney will know! And, though many are concerned about the cost of an attorney, it can be much costlier to go into asset division without expert guidance.
If you’d like to start understanding a cost-benefit analysis to a future divorce regarding asset division, then you can always give us a call for a free consultation. Our experienced attorneys can give you a ballpark idea of what to expect, outline a game plan to get you a preferred outcome, and let you know what sort of investment you’re looking at to keep the property that’s rightfully yours.