Property Division in Divorce

One of the most misunderstood and complex parts of a divorce is the determination of property rights between divorcing spouses. What is marital property? What is non?marital property? What about my pension? Who gets the car? Who gets the house? These are some of the questions that are asked by persons going through a divorce. It is important that you become aware of all of your rights regarding your property throughout the divorce process. An attorney will be better able to fully explain these rights to you once they hear the specific facts of your case.

What is Marital and/or Non-marital Property?

In a nutshell, any real or personal property that you and your spouse obtain from the date of your marriage is marital property, except for:

  • property obtained by one party as a gift or an inheritance from a third party
  • any real or personal property which you can directly trace to a premarital asset or a gift or inheritance from a third party, or
  • any property which is part of an agreement between you and your spouse.

    Any property that is determined to be non-marital property is then excluded, or exempt from the court's power to divide between the spouses. Any property determined to be marital property is therefore subject to the power of the court to determine ownership of and divide, if need be.

    A lot of people going through a divorce make the mistake of thinking that anything that they purchase or acquire after the separation can never be "marital property." This is wrong. Basically, under Maryland law, until you obtain the judgment of divorce, you are married. For example, if you bought a house an titled it in your own name after you separated, the court can still determine that the house is marital property.

    Can the Court Change Title to Property?

    First, you must understand what the difference is between property that is jointly titled and property that is solely titled, but still marital property. Jointly titled property is property that is titled in both your name and your spouse's name. For example, jointly titled property could be a car that you both bought, with both your names on the title of the car.

    Solely titled, marital property is property that is titled in one spouse's name but was acquired during the marriage. This could be your personal savings account titled only in your own name, but containing money that was earned during your marriage (except if it is non-marital property as described above).

    The court, except for a few exceptions, cannot transfer title of jointly titled or solely titled property from one spouse to another, even if the property in question is marital property. The only types of marital property that a court can transfer title of are pension, profit sharing, deferred compensation plan, and other retirement type accounts.

    Under Maryland law, aside from those types of accounts, the only authority the court has with regard to jointly titled assets is to order the property sold, and then order the proceeds to be divided between you and your spouse. For example, lets say that you and your spouse are joint owners of your two cars. If you cannot agree which car each of you will keep, the court will order them to be sold, and then divide the proceeds between the two of you. The court has no authority to order the sale of an assets titled in one spouse's name.

    How does the court then make sure that each spouse gets their "fair share" of the marital property if they cannot transfer title to most of the property that you and your spouse have accrued through your marriage? Under Maryland law, the court can grant a party a "monetary award," as explained below.

    What is a Monetary Award?

    As you have read so far, the court cannot transfer title of any marital property except for certain retirement and pension accounts. Additionally the court can only order the sale of jointly titled assets and divide these proceeds between the spouses. So to make sure that each spouse gets their "fair share" of marital property in divorce, the court has the authority to grant one spouse a "monetary award." This is basically a money judgment in favor of one spouse against the other, and can be enforced just like a money judgment. For example, if your spouse has a savings account in his own name, but the $10,000 in the account is found to be marital and half yours, the court cannot order your spouse to transfer ½ of the account to you. So instead, the court may grant you a monetary award in the amount of $5,000, and leave your spouse to determine how he wants to pay you the $5,000.

    What Will Happen to our House?

    It is most likely that you are joint owners of the house that you lived in while you were married. What happens to the house after the divorce? There are some important facts that you should know regarding your house and your divorce.

    If you and your spouse have children, then whoever gets custody of the children will be allowed to stay in the home with the children, but only for up to three years. This is the court's authority to order "use and possession" of the family home. Along with use of the house, the court can also allow the spouse with custody of the children to use the furnishings in the home.

    If the time that the court allows the spouse with custody of the children to use the home and the furnishings in the home expires, and you and your spouse still have not agreed upon the disposition of the home, then the court has no choice but to order the home sold, and the proceeds divided between you and your spouse. Usually, when this occurs, one spouse decides to "buy out" the other spouse's share of the home.

    Is my Spouse Entitled to any of my Retirement Account?

    If you earned any of the retirement funds during your marriage, then the short answer is YES. These types of accounts are considered marital property, so, as stated above, the Court does have the authority to transfer a part of the marital portion of funds in any retirement or pension account from one spouse to the other. There are specific formulas and ways that a determination is made as to how much of the account the other spouse is entitled to, but generally, a spouse is entitled to a certain percentage of the marital portion of the pension, or the portion earned during the marriage. Remember that the court does not have to give you or your spouse 50% of the marital portion of the pension, but for the most part, the courts generally will divide the marital interest in the pension 50-50.

    Who Will Oversee the Sale of the Property?

    If the court orders the sale of the property that you and your spouse cannot agree upon, the court will appoint what is called a "trustee." This is a person who will be given the absolute authority to oversee the sale of your property, including your house. An important fact to remember is that the trustee will be paid for his or her services. A trustee's fees can be expensive, and if you and your spouse cannot pay out of your own pockets, the trustee is authorized to deduct his or her fees from the proceeds of the sale of the property.

    What is a Voluntary Separation Agreement?

    If you and your spouse have agreed on all the issues surrounding your divorce, you can have that agreement written up in a form of a "voluntary separation agreement." This is a contract which the spouses enter into, and later, the court can include this agreement into the judgment of divorce. Once the court does that, not only is the document still a valid contract, but the court can also enforce the agreement as an order of the court, as well as a contract. You should consult an attorney before signing this document, since there may be things that you may be unaware of regarding your rights and responsibilities in divorce.

    Should I Proceed with my Divorce Without an Attorney?

    It is always important to be fully aware of your rights before proceeding with your divorce. An attorney will be better able to fully explain your rights to you, and having an attorney will provide you with a source of answers to questions that may come up during your divorce. Also remember that every case is different, and what may be a good way to resolve one case may not be good for another case. Although it is always a good idea to try and agree on the disposition of your marital property between yourselves, you should never agree on a disposition of property proposed by your spouse, no matter how fair it may seem to you, until you speak with an attorney, so that you are fully aware of your rights and responsibilities when dealing with the property issues that arise out of your divorce.

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