Division of Assets in a Maryland Divorce

In divorce, when it comes time to divide the accumulated marital assets, it is rarely as simple as adding everything up and dividing by half.  Maryland divorce law operates under a principle of “equitable distribution,” which does not necessarily mean each spouse is entitled to half, and a judge can make different allocations depending on the circumstance. That is only the beginning of the complexity since marital assets often are challenging to divide for financial, legal, and emotional reasons.

Understanding Equitable Division in a Maryland Divorce

At the heart of asset division lies the principle of equitable distribution, which aims to fairly allocate property acquired during the marriage. However, achieving this fairness is seldom straightforward. Marital assets encompass a broad spectrum, ranging from tangible properties like homes and vehicles to intangible assets like investments, retirement accounts, business ownership, and intellectual property. Many of these assets can’t simply be split in two. Instead, Maryland’s Marital Property Act looks at the facts and circumstances to decide how to best achieve a fair division of property. Among other factors, the court will look at:

• The contributions, monetary and nonmonetary, of each party to the family
• The value of all property interests of each party
• The economic circumstances of each party at the time the award is to be made
• The circumstances that contributed to the estrangement of the parties
• The duration of the marriage
• The age of each party
• The physical and mental condition of each party
• The acquisition of and contribution to the value of the marital property by each party
• Any other factor that the court considers necessary or appropriate.

The valuation of these assets often involves professional appraisers or financial experts to ensure accuracy, adding another layer of complexity to the process.

Marital vs. Non-Marital Assets

Complications arise when assets are commingled or acquired before the marriage, blurring the line between separate and marital property. In equitable distribution states, determining the extent to which premarital assets should be considered can be contentious, especially if there’s been significant appreciation during the marriage. Furthermore, inheritances, gifts, and assets acquired post-separation further complicate matters, requiring scrutiny to differentiate between marital and non-marital property.

Non-Monetary Complications in Marital Asset Division

Marital assets are rarely as simple as their book value. The preferences of each spouse (not to mention vindictiveness in a contentious divorce) can lead to significant disputes over the fair allocation of assets. Here are some particular complications:

1. Emotional attachment. Possessions often carry sentimental value beyond their monetary worth. Items like family heirlooms or pets can become focal points of contention, triggering intense emotional battles that prolong the divorce process.
2. Business interests. Evaluating the business’s value, determining each spouse’s contribution, and establishing fair buyout terms demand specialized expertise and meticulous analysis. Sometimes, selling the business or maintaining joint ownership post-divorce may be the most viable option, requiring comprehensive legal agreements to safeguard both parties’ interests.
3. Retirement accounts and pension plans. As these are tax-sensitive assets, it is difficult to determine the division of these assets, particularly when spouses have disparate earnings or varying contributions to these accounts. Qualified Domestic Relations Orders (QDROs) may be necessary to divide retirement assets. Failure to navigate these intricacies meticulously can result in substantial financial repercussions for both parties in the long run.
4. International or high-net-worth. These divorces can involve cross-border legal jurisdictions, offshore accounts, and complex investment portfolios. Legal frameworks, tax implications, and enforcement mechanisms vary widely across jurisdictions, necessitating coordination between legal experts in multiple countries to achieve a fair and enforceable division of assets.

Since dividing assets in a divorce is a multifaceted process fraught with complexities stemming from legal, financial, and emotional factors, it is critical to approach the division with attention and caution. While some divorces are too bitter to allow the parties to work on a collaborative solution, it is generally preferable to work out a division through a settlement agreement instead of incurring the expense and risk of a trial. In trial or alternative dispute resolution, financial, tax, and valuation experts may be needed to identify and account for the entire marital estate and argue for its equitable division. Identifying these experts and guiding the parties through the complexities of asset division in Maryland should be done in consultation with an experienced family law practitioner.