Property Division Attorneys in Rockville
How Equitable Division Works in Maryland
Marital Property Distribution can be a contentious part of divorce. People often become preoccupied with getting their "fair share" of the marital estate, which can lead to increased tension and disagreements throughout the divorce process.
If you are contemplating divorce, our Rockville property division attorneys at Fait & DiLima, LLP, can help you understand how Maryland's property division statutes can affect your divorce. We also seek to save you time and money by avoiding the stresses of litigation and providing the option of a collaborative law or mediation approach. Take the first step and contact us today.
Understanding how equitable distributions works, and what steps you can take to ensure your marital state is equitably distributed, can help you navigate the property division process more easily.
What’s the Equitable Distribution Process in Maryland?
Contrary to popular belief, equitable distribution does not always result in an "equal" division of the marital estate. Equitable just means "fair," not necessarily equal. For example, if one party in a marriage uses their personal money to make an investment explicitly for themselves, it's highly unlikely the court will split that investment equally during the divorce process. Instead, the party who made the investment will probably receive all or most of the investment.
There are a variety of factors at play when courts consider how a marital estate should be divided. Some of the elements that play a role in the equitable distribution process include:
- The financial needs of each spouse. For example, if one of the spouses doesn't work, and no alimony is being considered as a part of the divorce, the court may award that spouse the marital house if both spouses contributed equally to purchasing the house originally.
- What each party has contributed to the estate, either individually or together. If both parties in a divorce decide to sell their marital house, and both parties invested equally in the house, they'll probably receive an even split of the profits. However, if one spouse took on the lion's share of investments in the house, they'll probably receive more from selling it than their prospective ex who invested less.
- Actions in causing the breakup. Certain actions, such as adultery, domestic violence, etc. may cause the court to adjust what they consider to be an equitable distribution. If one spouse intentionally harms their ex through their actions (destroying property, physically harming them, etc.) they'll probably be punished by the court during the equitable distribution process.
- Debt division. The court will take into account how much debt each party has, and whether or not that debt should be split equally by the partners (if held in a joint account), or if one party should shoulder more of the debt.
- Retirement assets. If either party has retirement assets, such as a 401K, that asset is eligible for equitable distribution if the court sees fit.
- Divorce tax issues. The court will take into account how both parties are likely to be taxed on the assets they receive from an equitable distribution arrangement. If one of the parties is in a position where they may receive tax breaks on a certain asset or won't be able to pay taxes for a specific asset, the court will take those factors into consideration.
Additionally, you should understand the difference between active and passive appreciation:
- Active appreciation occurs when an asset increases in value due to the direct actions of a party. For example, if the spouses jointly own a business, but one spouse was solely responsible for making major business developments that led to an appreciation of assets, that spouse may receive more of the business or its assets during the distribution process.
- Passive appreciation occurs when an asset appreciates in value without any specific investment. For example, if you buy a plot of land and it slowly increases in value without you making any changes to the land, the value of the asset is passively appreciating. However, if you did make investments in the land (planting a garden, for example) and those investments appreciated the value, it would qualify as active appreciation.
Courts will take into account whether an asset is actively or passively appreciating when determine an equitable distribution arrangement. Most courts will bias splitting assets towards the person more responsible for that asset's active appreciation, so keep that in mind.
How Can I Make Sure I Get My Fair Share During Equitable Distribution?
At the end of the day, there's a reason most divorces are settled out of court. If you take your divorce to court and allow a judge or jury to dictate your equitable distribution, you're essentially at the mercy of the court. How sympathetic a judge or jury is to your case will vary on a case-by-case basis, so leaving your equitable distribution in the hands of the court is risky.
One of the primary reasons we offer collaborative law and mediation services here at Fait and DiLima, LLP is because most parties find arrangements reached through mediation and collaboration more agreeable than arrangements dictated by the court. So, consider mediating the equitable distribution process with your ex before you try to take them to court.
No matter how you choose to handle the equitable distribution process, there are some steps you can take to make the process less complicated:
- Evaluate any premarital agreements you signed. Most prenuptial agreements specify how assets will be divided in the event of a divorce, so if you signed a premarital agreement with your ex, read it and see what the stipulations are.
- Make a list of all the assets you know about in your marriage. Frequently, courts will have an unbiased third party evaluate a couple's assets to determine their value during the equitable distribution process. However, if you want a head start, hiring someone like a CPA who specializes in appraisal and valuation can help you understand how equitable distribution will affect you. If you suspect an equitable distribution will result in a rough financial situation for you, evaluating your assets ahead of time can help you prepare financially.
- Keep an eye on your assets. If either party intentionally devalues an asset to try and get off easier during the equitable distribution process, they can be punished by the court. You can also be punished for attempting to hide the existence of an asset. Try and ensure neither you nor your ex take any actions that would result in asset devaluation or hiden assets.
- Compile as many financial records as you can. Having financial records proving what you contributed to various assets during your marriage can be invaluable. Having a strong paper trail tying you to certain assets can allow you to retain those assets more easily during the equitable distribution process.
For more than 20 years, family law firm Fait & DiLima, LLP has represented divorcing couples facing property division issues. Whether you have a modest marital estate or tens of millions of dollars in assets, our attorneys can provide prudent advice to help you reach the best possible resolution to your particular case.
Contact us online or give us a call at (301) 888-6384 to receive your free consultation.
Dorothy R. Fait & Marjorie G. DiLima are Published Authors of Divorce In Maryland: The Legal Process, Your Rights, and What to Expect (2017)
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