Even if you don’t have a prenuptial agreement, you may still be able to protect property that you brought into the marriage. The key to protecting premarital property in the event of divorce is keeping it separate from marital property. In Maryland, only marital property is subject to equitable distribution between the parties. Nonmarital property is not subject to equitable distribution, which means that the party who owns nonmarital property simply keeps it. Nonmarital property is: (1) property acquired prior to the marriage; (2) property acquired by inheritance or gift from a third party; (3) property excluded from marital property by agreement; or (4) property that is directly traceable to one of these three other categories.
One dispute that can arise is when you “acquired” the property over time. For instance, if you are paying a mortgage or car loan, each loan payment goes toward the acquisition of the property. A car may be purchased prior to the marriage, but loan payments made both prior to the marriage, which results in a nonmarital interest, and after the marriage with earnings that are marital property, which results in a marital interest. In that situation, a portion of the value of the car is nonmarital property, and a portion of the value of the car is marital property. The exception to this principle is if the property at issue is real property titled in both parties’ names as tenants by the entireties. In that case, the real property is considered marital property regardless of whether the mortgage payments are made with marital or non-marital property.
Another dispute that can arise occurs when you mix nonmarital property with marital property. For example, you may sell an asset that you brought into the marriage and use the sales proceeds to buy a different asset. In that case, the property can still be directly traced to nonmarital property and is nonmarital property. The result can change, however, if for example, you deposit the sales proceeds into a bank account that contains marital funds and a significant amount of times passes and/or there are a significant number of other transactions in the bank account to the extent that the purchase of a subsequent asset can no longer be directly traced back to the nonmarital property. In that case, the court may determine that the property at issue is marital and is subject to equitable distribution.
The outcome depends greatly on the facts of each case. If you own significant assets prior to marriage, your best way to protect them is to enter into a prenuptial agreement. If you do not have a prenuptial agreement, however, consult with an experienced family lawyer to determine whether you may still be able to protect the property in the event of divorce.
If you have questions about this or any other Family Law issue please contact Catherine H. “Kate” McQueen at (240) 507-1718 or firstname.lastname@example.org.
ABOUT KATE MCQUEEN
Catherine H. “Kate” McQueen is a family lawyer and principal in Offit Kurman’s Bethesda office and is licensed to practice in Maryland, Virginia, and the District of Columbia. Ms. McQueen focuses her practice on the many legal issues that impact families, including all the issues arising out of a divorce, such as custody, child support, alimony, and other financial and property issues. She also has extensive experience in guardianship matters for children and incapacitated adults, including assisting clients in petitioning for guardianship, serving as court-appointed counsel for alleged disabled persons, and serving as court-appointed guardian for individuals when their family members or friends are unwilling or unable to do so.
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