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Maryland Property Division
Property Distribution Laws in Maryland

In Maryland the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the Circuit Court within the Judgment of Divorce.

Maryland is an equitable distribution state. The division of property and debts between the divorcing spouses is fair and equitable, but not necessarily equal. There is no fixed standard to divide property, the district court decides each case on its facts, and the courts discretion is seldom challenged on appeal unless abuse can be shown.

The court divides joint accounts equally.

Except for pensions, the court cannot change title to property.

Some marital property - such as the house and furniture - is sold so that the proceeds can be divided equally. Sometimes to do this, the court makes a monetary award, a judgment in favor of one party. A judgment must be enforced, which can mean additional legal proceedings.

A shortterm marriage makes for an easy division of property. Courts try to untangle the marriage because there are generally few marital assets. This means returning to the husband and wife what each brought to the marriage, both assets and debts, and dividing up in a fair way the assets and debts accumulated in the marriage. The court attempts to return the parties to the financial position in which they arrived at the marriage. The more the parties mingle their assets, however, the more difficult this untangling becomes.

In distributing property after a longer-term marriage, the judge begins with something like a 50/50 division of the marital estate. The judge may depart from that 50/50 standard depending on what he or she thinks is equitable under the circumstances.

Factors in Equitable Distribution

The court can consider marital misconduct, but it matters less than most people expect it does. The judge has, as they say, heard it all before.

According to Maryland Code, Family Law Article Section 8-205(b), in dividing property, the court must consider:

  • the length of the marriage;
  • the age, health, skills, and abilities of the parties;
  • the amount of separate property owned by each spouse;
  • the relative ability of the parties to acquire property in the future;
  • the financial needs and liabilities of the parties;
  • the contribution to the education or to the earning power of the other;
  • the contribution to the value of the marital property or the separate property;
  • the premarital property and postmarital property;
  • the financial conditions of each party;
  • the tax consequences;
  • the use and possession; and
  • other factors that the court considers appropriate (like misconduct).

Marital Property vs. Separate Property

Separate property is acquired before the marriage, or outside the marriage (such as by gift from a third party or inheritance), or is excluded by a valid agreement. A gift from a spouse is marital property, however. Non-marital property can be converted into marital property, for example, by mingling marital and non-marital accounts, changing the title on premarital accounts from sole to joint, or changing title on real estate to tenancy by the entireties.

Valuing and Dividing Property

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally it distributes the marital assets between the two parties in an equitable manner. In other words, first, the court finds and values the property (equity in the house, value of pensions, value of antique furniture). Then the court determines whether the particular piece of property is separate or non-marital property and remains with the person who owned it. Finally the court distributes the marital property.

The Marital Home

When the marital home is jointly owned, one spouse cannot force the other to leave. However, when a couple jointly owns a house and domestic violence is involved, the court can order a spouse to leave for up to a year. The court can give exclusive use and possession of a house, furniture and automobile, to a parent with primary custody of the children for up to three years after the divorce.

In Maryland, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) from are deducted the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and buy out the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In Maryland vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.

Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In Maryland, the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:

  • Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)s, 403(b)s and profit sharing plans fall into this category.
  • Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employees salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.

In Maryland spouses share in each others retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.

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