Divorce is an emotionally difficult process, and for some, it can lead to financial hardship. On top of all the other worries involved, people are justifiably worried about how to protect their property.
To best protect your assets throughout the divorce, you should learn some key concepts about how property is divided in Maryland. The following helps explain that process and offers tips for keeping your assets safe in a divorce.
Equitable Asset Division in Maryland
The state employs equitable asset division laws when dividing property in a divorce.
In this system, spouses should not expect a 50-50 split of marital assets. Rather, the court tries to divide assets according to what it believes is fair.
Determining this fairness means considering a variety of factors. To achieve an equitable asset split, the court will look at:
- The length of the marriage
- Each spouse’s earning potential, factoring in their age, health, work history, etc.
- Child custody arrangements and which parent will need access to which property
Keeping your property means convincing the court that the asset rightfully belongs to you. Make sure to work with an experienced attorney who understands the nuances of equitable asset division. They can help you build a strong case for which property you can secure.
What Are Marital Assets?
Marital property refers to any assets and liabilities a couple acquired during their marriage. These assets can include anything. Real estate, vehicles, bank accounts, investments, retirement accounts, and personal belongings can all be marital property. If you buy a candy bar while you are married, your spouse is technically joint owner of your snack.
In a divorce, marital property is divided between the spouses.
Spousal support, on the other hand, belongs to just one person, and it is not subject to division. Generally, this includes anything you owned before your marriage, gifts from people outside the marriage, and anything you inherit.
Tips for Protecting Your Property
Gather Important Financial Documents
Collect documents like bank statements, investment accounts, tax returns, and insurance policies to provide an accurate picture of your finances. Doing so gives you a clear understanding of your assets, debts, and overall financial health.
This information will be vital when dividing property in a divorce. It helps you communicate what you have, what you need, what you stand to lose, and so on.
Create an Inventory of all Marital Assets
You also need a clear picture of what you jointly own with your spouse. Start working on an inventory of your marital assets now. Remember, this includes any property you acquired during the marriage.
Leave no unturned. Include the big items like real estate properties, investment portfolios, retirement accounts, etc. Also include every collectible you own, every piece of jewelry you bought your spouse, the family car, and more.
A clear account of all the property you hold together helps guide your next steps. You know which items you can gladly give over and which require negotiations. During a divorce, it’s always best to plan ahead and take practical steps to settle disputes.
Consider Negotiating Outside of Court
Not every couple must allow a court to make their divorce decisions. You have the right to create an agreement together.
To avoid a long, costly legal battle, you can negotiate a divorce settlement agreement with your spouse outside of court. By doing this, you and your spouse can work together. Using methods like mediation, you may be able to come up with a mutually agreeable solution, meeting both your needs.
This approach saves you time and money, and it allows you to maintain control over the outcome of your divorce. With proper legal guidance, you can protect your assets and ensure a fair division of property.
Account for Taxes
Splitting assets is not always as simple as one person giving the other something. Often, transferring or selling property comes with taxes. For instance, the tax rate on selling stocks or investment properties has a big impact on what you actually receive.
Even when a property split seems fair, taxes throw everything off balance. Either party could be stuck with heavy tax penalties, leaving them in the red.
Diving your assets fairly in a divorce is already a complex situation. Accounting for potential tax fees makes this process even more convoluted. Make sure you work closely with attorneys and financial advisors to make sure taxes don’t overly penalize either party.
Factor in Spousal Support
When creating your property division plan, make sure to account for any spousal support payments. These payments can have a significant impact on the overall division of assets. When payments are high, the payor may be entitled to more property. If payments are low, the receiver should probably get more of the overall assets.
When Is Bankruptcy a Good Option?
In the best situations, spouses can leave a divorce satisfied, and no one feels cheated. Working with a good lawyer increases your chances of this outcome.
The unfortunate reality, however, is that divorce can sometimes leave someone financially broken. In these cases, it may be necessary to take additional steps to protect yourself from financial ruin.
If you anticipate problems paying off debts after your divorce, bankruptcy is an option. This may seem like an extreme measure, but it could be a smart move. In many cases, bankruptcy can help ensure your financial stability and protect your assets from seizure by creditors.
Do your research and speak to your attorney before taking this step. It’s important to understand the implications of bankruptcy. It can impact your credit score and your ability to obtain loans in the future. However, it could also offer you more protection after your divorce, setting you up for a more secure financial future.
Divorce should never leave either party in financial ruin. If you’re worried about your property post-divorce, reach out to Law Office of Nicholas T. Exarhakis today. You can schedule a consultation with us, and we may be able to review your case and help guide your next steps. You can reach us online or call us now at (410) 593-0040.