Maryland law allows divorcing couples to negotiate a fair and reasonable property settlement agreement instead of forcing the court to decide on division of property in a divorce property settlement case. The court typically accepts these agreements so long as they are equitable. If the couple cannot agree, the judge makes the property division decisions for them.
How does the division of property work?
Some couples can agree on how to split assets and property from the start, but this is rare. Most couples require either informal settlement negotiations or mediation to determine how they will divide their property. Before these negotiations or mediation can begin, however, you must first determine which assets to include and how much these assets are worth.
Marital property, in general, is any asset that the partners acquired during the marriage. Even if a home is in your name only, Maryland law entitles your spouse to a portion of the equity if you bought it during your marriage. There are exceptions to this rule, primarily if you inherited the asset or if there was a prenuptial agreement.
Once you know which assets are subject to division, you must appraise the value of each asset. This typically requires help from professionals and expert appraisers, especially in the case of a business or property valuation.
What are some options for dividing individual assets?
The end result of the process of valuation is to have a good understanding of how much your assets are worth so you can decide how to split them between each partner. The property settlement will outline how the property is being divided up amongst you. There are a number of options for dividing your assets:
- Buyout: One partner can pay the other for his or her portion of an asset. This often occurs with the family home, when one party pays the other for half (or another agreed-upon percentage) of the value of the equity of the home, refinances it into his or her name only, and continues living in the house.
- Selling the asset and splitting the proceeds: This option is self-explanatory. Couples often decide that neither party wants to keep an asset or they cannot decide who gets it, so they sell it at fair market value and split the money they receive. In the case of the family home, this means putting the house on the market and selling it to a third party. Once sold, they pay off the mortgage and other debts against the home, then split any money that is left.
- Divide the assets: Divorcing couples often have assets that one party values much more than the other. In this case, dividing the assets fairly is often a good option. If one party wants to keep the family home, the other may agree to keep a vacation home or a prized art collection. If your spouse collected fine wine while you prefer vintage guitars and you both want to keep your collections, this may be the best way to do so.
It is important to note that couples typically must divide debts in the same manner as assets in Maryland divorce cases. Couples can also choose to include debts in their property settlement agreements along with their assets.
What if we cannot reach a fair property settlement agreement?
The goal of property division is to split the value in a fair manner. If you task the court with dividing your property, the judge will determine what constitutes an equitable split.
To maintain more control, keep the process more civil, and save time and money, many divorcing couples work together to compromise on a divorce property settlement agreement. Once they reach this agreement, usually with the help of a settlement agreement attorney, the court incorporates it into the decree and it becomes legally binding.
In some cases, couples simply cannot agree to a fair division of property, even with mediation and other efforts. Under Maryland law, these couples can take their case to court where a judge or arbitrator hands down a decision. The court bases this decision on a number of factors, not limited to:
- How long the marriage lasted
- The age and health of each spouse
- The financial health of each spouse
- Other related financial decisions, including spouses receiving alimony or the family home
- How each spouse contributed to the family, both monetarily and non-monetarily
- When each spouse obtained specific property and assets
- Marital misconduct
Hecht & Associates Can Help
When trying to reach a fair divorce property settlement agreement, there are a number of pitfalls that come with trying to go it alone. The settlement agreement lawyers of Hecht & Associates have the experience and resources to ensure you understand all of your options when it comes to property division law in Maryland.
To learn more, call us today at 301-587-2099 and speak with one of our property settlement lawyers.