The Maryland law, known as The Marital Property Act, defines Marital Property as "all assets acquired during the marriage, except those acquired by inheritance or gift from a third party or assets which are directly traceable to those assets." Identifiable property which was held before the marriage is also usually excluded from the definition of marital property. For purposes of making a monetary award at the time of an absolute (final) divorce, the court can find that property can be partially non-marital and partially marital.

There are many cases which have examined the Maryland courts' interpretation of the law which gives the court the power to value marital property, and then to make a court award and equitable distribution of the assets acquired during the marriage. Before a court can make an award, it must make a finding as to value. The parties must provide current and accurate information.

The Maryland court cannot change title to property. (It cannot order one spouse to sign over title to a car or a house to the other spouse.) The court can determine who owns personal property and real estate. The most that the court can do is to grant one spouse a monetary award of a certain amount of money, and to require payment by the spouse against whom a monetary award is made. If real estate is titled jointly, the court cannot change title to real estate, it can only order the property sold so that each owner receives his or her share according to title.

If the Court decides the equitable division of marital property, it has broad discretion. Equitable division does not necessarily mean equal division of assets. The law requires that the assets be valued as of the time of the divorce hearing, not at the time of separation or some other event. There are different state and federal laws with regard to pensions and other tax-deferred savings plans which may affect the ability of the court to value and award a pension interest. The court has the power and broad discretion to determine whether the spouse seeking the monetary award should receive 0-50% or more of marital assets, or an award that is an adjustment of the equities if one party will not have an equitable share of the assets acquired during the marriage in his or her name after the divorce. The applicable law requires the court to go through a three step process: if an equitable adjustment over and above the distribution of the spouse's property in accordance with its title is an issue, the court 1) shall determine which property is marital property and what should be excluded as non-marital property; 2) the court shall then determine the value of all marital property; 3) the court may make a monetary award as an adjustment to the parties' equities and rights concerning marital property whether or not alimony is awarded. The characterization of property as marital property and the determination of value of all marital property are prerequisites to the granting of a monetary award.

The court must consider a number of issues in reaching its determination as to the amount, if any, of a monetary award to be granted to one spouse. The factors the court must consider are very similar to those the court considers in making an alimony determination: 1) the contributions, monetary and non-monetary, of each party to the well being of the family; 2) the value of all property interests of each party; 3) the economic circumstances of each party at the time the award is to be made; 4) the circumstances that contributed to the estrangement of the parties; 5) the duration of the marriage; 6) the age of each party; 7) the physical and mental condition of each party; 8) how and when specific marital property or interest in the pension retirement, profit sharing or deferred compensation plan was acquired including the effort expended by each party in accumulating the marital property or the interest in the pension, retirement, profit sharing, or deferred compensation plan or both; 9) any award of alimony and any award of other provision that the court has made with respect to the family use personal property or the family home; 10) any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award or transfer of an interest in the pension, retirement, profit sharing or deferred compensation plan or both.

All marital and non-marital assets must be valued. Both parties will be expected to produce all documents reflecting the current value of the assets acquired during the marriage or outside of the marriage. When there is not full disclosure, the costs of discovering assets and having them valued can add up very quickly.

It is also important to provide information as soon as possible if you believe that marital assets are being hidden or dissipated so that they will not be in existence at the time of the divorce hearing. The value of any asset is reduced by the amount of the loan which was incurred to buy it. For example a car with a blue book value of $15,000, but with a loan of $8,000 has an equity value of $7,000. The court cannot require that one spouse or the other be responsible for the payment of a joint debt, but the court will take into consideration the evidence of who has been making payment on joint debt as one of the factors which will affect a monetary award.

There are certain tax planning advantages to attempting to agree to the payment of alimony and/or the transfer of title to assets as part of an overall property settlement. It is important that each client review the tax consequences of any proposed payment or property transfers with a competent tax advisor. While this office attempts to be informed about the tax issues affecting clients, we are not tax experts and do not prepare client tax returns. Tax advisors can provide substantial assistance in identifying and valuing marital assets and the most tax beneficial way to structure payments or transfers of property between spouses so as to maximize the monies available to the family.