By: Valerie E. Anias.
No. Maryland is not a Community Property state. This is a question I am often asked by new clients. If client’s don’t ask, they often assume that Maryland is a Community Property state and are disappointed when they learn that’s not the case. Community Property means that any property that is owned by spouses is marital property. For divorcing couples in Community Property states, any property that either spouse owned prior to their marriage or property acquired after the separation would not be considered marital. Additionally, all Community Property is split evenly, 50/50, between the spouses. In Maryland, this is not true.
Maryland is an Equitable Distribution state. In an Equitable Distribution state, all property (with very few and narrow exceptions) acquired during the marriage is marital property, regardless of who paid for it. Additionally, property that is non-marital can easily become marital depending on how it is treated. In other words, any property may be considered marital property. Yes, that includes the house you purchased 5 years before you got married. Yes, that includes an inheritance you received during the marriage and put into your joint account. Yes, that includes the new car you bought after you separated. Yes, yes, yes. Finally, in an Equitable Distribution state, property needs to be divided fairly and fairly does not mean equally.
For example, Jamie and Taylor Smith bought a home after they were married and upon their divorce it has approximately $100,000.00 in equity. In addition, Jamie bought a new car after separating from Taylor. In a Community Property state, each party would receive $50,000.00 of the home but Jamie’s car would not be marital because it was purchased after their separation and therefore, Jamie would keep the car. In Maryland, both the house and the car would be marital because it was acquired during the marriage. How that property is divided would be dependent upon the circumstances. Perhaps Taylor earns $30,000.00 per year and Jamie earns $250,000.00 per year. The Court may be inclined to give Taylor $75,000.00 of the equity in the home and the car and leave Jamie with $25,000.00 of the equity of the property. Whatever the division, the Court is only concerned with having an equitable, or fair, division not an equal division.
Understanding what is and is not marital property is important. It is even more important to understand how to keep non-marital property from becoming marital property. One easy way to do this is to enter into a Prenuptial or Postnuptial Agreement. Any agreement should be drafted by a qualified attorney to ensure you are receiving the protections necessary to effectuate your goals.