Generally, American states use one of two methods to divide property in a divorce. One is called the equitable model, where a court’s main concern is trying to remain fair. The other is the equal model, also called the “community property” model, where courts attempt to split equally among the spouses.
Here is a broad overview of each system, comparing how each works and it impacts people in a divorce.
Equitable Property Division in a Divorce
Maryland is an equitable division state. In fact, most of the U.S. uses this model.
The word “equitable” is often confused with the word “equal.” Generally, “equitable” is a synonym for “fair.” A real-world example of equity is a wheelchair ramp. Everyone has equal access to the building, but not everyone can use the stairs. The builders install ramps to make access more equitable.
In terms of a divorce, an equitable system attempts to give property to the spouse who deserves it. This is called “entitlement” to that property.
There are no direct, set standards for what makes one spouse more deserving of property than another. Generally, courts aren’t too concerned with who purchased the item or who kept up with the payments.
Courts can consider many factors when splitting property equitably. They can look at:
- Who used the property most
- Who maintained or added value to the property
- Who will need the property more after the divorce
- Who will have primary custody and whether the property will benefit the children
Let’s consider the family dog. Jim adopted Fluffy when she was just a puppy. He gave Fluffy to his wife Sarah as a birthday present. Over time, Fluffy developed a clear attachment to Jim. She follows Jim everywhere, goes with him on errands, and waits for him by the door.
Jim returns this affection. He gives Fluffy all her baths; he handles her vet visits; he walks her several times a day; and so on. Eventually, everyone must admit that Fluffy is “Jim’s” dog.
When the court begins dividing property in Jim and Sarah’s divorce, it will take all of the above into consideration. Sarah will have a difficult time arguing that she deserves to keep Fluffy. The bond between Jim and Fluffy is obvious, and the fairest solution is to let Jim keep her.
Equal Property Division in a Divorce
Community property states are mostly concerned with whether property is a marital or a separate asset. Marital property is essentially anything that was purchased during the marriage. Regardless of who paid for or used the item, both spouses own it equally.
Separate property comes from outside the marriage. It includes gifts from friends, inheritance, and anything someone owned before the marriage.
Under an equal property division model, courts want to give each spouse one-half of the overall assets. This includes savings, physical property, and even debt.
Courts will still use fairness as the standard for who receives which specific property. Using the scenario above, Jim will still keep Fluffy in an equal property division state.
The difference is this: In a community property division state, you will owe your spouse half the value of whatever you keep.
This fact presents a problem. Imagine that the court allows Sarah to keep all the jewelry Jim bought her. She’s accumulated many pieces over the years, and the collection is worth thousands of dollars. Now, she owes Jim a good sum of money to keep her precious jewels. Unfortunately, all that value is tied into the jewelry itself. She doesn’t have the assets on hand to pay Jim what she owes.
Spouses have several options to pay one another in an equitable division of property. They can:
- Sell property and split the profits evenly
- Simply pay the other spouse what they owe
- Trade physical property until each has 50% of the marital assets
Bypassing the System
Fortunately, spouses are always free to decide for themselves how they want to divide property. If they can make these agreements themselves, they can commit them to paper and submit them to the court.
Most divorcing spouses will need a little extra help. For them, mediation is a good option. It brings in a neutral third party to facilitate negotiations and make sure the spouses didn’t miss any important steps. If a couple can afford it, a collaborative divorce allows them to bring in multiple lawyers and outside experts to help everyone get what they want.
If you have concerns about your property in a divorce, give us a call for help. You can reach our team at (410) 593-0040, or you can contact us online.