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Division of Property – What is “Fair and Equitable”

When considering division of property, courts in Maryland apply a “fair and equitable” standard.  In general, this excludes consideration of which party caused the divorce.  Rather, courts consider the economic circumstances of each party at the time of the divorce.

How does a court determine what is “fair and equitable”?

A divorcing spouse who has no interest in divorce will not consider it “fair and equitable” to give up half of his or her pension or property. Nor will they find it “fair and equitable” to pay spousal support to a less financially solvent spouse who wants to end the relationship.  That said, the court doesn’t approach property division with that perspective.  Rather, the divorce itself is presumed, and the division of property, where the parties cannot agree, falls to the court, who must do so in a “fair and equitable” manner.

What Does “Fair and Equitable” Mean?

Fair and equitable does not necessarily mean equal.  While something close to equal is often the result, depending on the circumstances, the division may be very unequal.  Courts will generally presume both spouses contributed substantially to the income and acquisition of property during the marriage.  For example, imagine one party worked 70 hours a week and the other party worked as a stay-at-home parent during the course of the marriage.  The fact only one party collected a paycheck will not negatively impact the other party in the division of property.

The court’s determination of fair and equitable is focused on the economic condition of the parties at the time of the divorce.  This is the basis for determining what division of resources is fair.

Factors Considered When Determining “Fair and Equitable” Division of Property

Some factors the court might consider include:

How long the marriage lasted.

The relative earning capacity and education of the parties.

The contribution of a spouse as a stay-at-home parent or homemaker.

The contribution of one spouse to the other’s education or ability to earn income.

The absence of one party from the job market and how it has impacted his or her finances.

The health of the parties.

The financial needs of the parties, including parenting duties.

Whether one of the spouses has taken efforts that increase the value of a premarital asset.

If the court determines one spouse will be at an economic disadvantage after the divorce, the court can use a “fair and equitable” division of property to create a fair result.  Courts attempt to leave the parties on equal economic footing as much as possible.  Courts want to prevent significant negative long-term financial impact on both parties.

What Property Does the Court Divide?

The court divides only marital property.  A court will consider nonmarital property for purposes of determining “fair and equitable” division of marital property, but it only divides marital property during a divorce proceeding.  For example, if one spouse has a great deal of nonmarital property and the other spouse has very little, a court may give more marital property to the spouse with little nonmarital property.

Property is generally nonmarital if it is acquired prior to the marriage or during the marriage if acquired in certain ways.  This can include inheritance, gifts from a third party, or if property is acquired by using nonmarital assets.  Other property acquired during the marriage is generally presumed to be marital property.  A spouse that argues property acquired during the marriage is nonmarital must prove that claim.

When Courts Consider Fault

Courts exclude evidence of a party’s fault in general.  However, bad acts during the marriage can be considered if they impact a fair and equitable result.  Some examples include:

  • Infidelity if the party diverts income and family resources to spending on another person;
  • If a party has lost significant marital assets due to his or her gambling problem;
  • When a party sustains a criminal conviction resulting in the government forfeiture of marital assets; or
  • A party’s failure to support a spouse caring for the parties’ children during the separation and is instead supporting a new family and partner.

A spouse upset about a divorce will frequently have ideas about how their spouse’s bad behavior during the marriage resulted in economic hardship for the family.  However, for the court to consider the bad behavior, the economic consequences must be significant.  It must also be relevant to the court’s crafting a decision that is fair and equitable.

How is Value Determined?

A very important factor in dividing assets is determining their value.  Courts use current fair market value for this assessment.  For example, imagine the parties paid $20,000 for a car six years ago.  In asessing today’s value, the court will use reliable sources, like Kelly Blue Book, to determine what the car would sell for now.

Parties in a divorce frequently agree on the value of an asset and submit that information to the court.  If the parties cannot agree, they will submit proposed values to the court.  This includes any supporting documentation.  It may also include a professional appraisal for jewelry, real property, collections, or one of a kind items.

Factors Relied Upon When Deciding Value

Courts consider a number of factors when deciding value, including:

When the property was used;

The time of the purchase;

The condition of the property;

Current resale value of the property; and

The separation date of the parties.

The date of the valuation of the property is important.  The value of the property may change over time.  The court will use the valuation date of its choosing to achieve a “fair and equitable” result.

If You are Considering Divorce

If you are considering divorce, our family law lawyers can help.  We have over 50 years of combined family law experience.  Contact our office for a consultation today.

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