Along with child custody, property division is among the most challenging issues involved in a divorce.
When couples divide up marital property, this division is a clear visual representation of the separation.
What’s more, because of the fact that Maine is an “equitable distribution” state, people often scramble to make their case regarding precisely how much of the marital property they should receive.
There is no avoiding the fact that property division can often be a very labor-intensive and difficult process to navigate in the State of Maine.
But, the more the parties know about how this process works, the smoother things should go (hopefully).
In this post, we will discuss in detail the concepts and processes involved with property division here in Maine. As we will see, Maine uses the theory of equitable distribution when dividing marital property, like many other states.
We will also discuss property classification issues, assessment issues, and issues pertaining to the actual distribution of the marital property between parties.
In addition, we will also touch on debt distribution and property settlement agreements.
As mentioned, Maine uses the concept of equitable distribution to inform marital property division. Essentially, equitable distribution is the idea that marital property should be divided fairly between the parties following divorce.
You can think of this as Maine’s starting point or recurring position; whenever a divorce occurs, Maine starts off with the principle that the property should be divided in such a way that both parties are treated fairly.
In this context, fairness is really the key term, and dividing property fairly is not the same as dividing property equally.
When a Maine judge examines a given case, he or she will take into account a broad range of factors to determine the fair outcome. There are many things which can influence the outcome in a given case.
Consider the following scenario: one spouse initiates a divorce after 10 years of marriage. During the marriage, the spouse which initiated the divorce began and finished pharmacy school, and subsequently began working as a pharmacist.
Furthermore, the other spouse contributed to the education of the spouse who completed pharmacy school, and took care of the majority of the childcare responsibilities. The spouse who initiated the divorce attempts to argue that the marital property should be distributed primarily to him or her, because many of the key purchases (house, investments, etc.) were made possible because of his or her professional success.
In this situation, a Maine judge would need to consider all the contributions, financial and otherwise, made by the defendant spouse in the property division analysis.
After considering all contributions, the fair outcome would likely be a distribution which doesn’t heavily favor the plaintiff spouse.
Equitable distribution contrasts with community property. A state which uses community property basically begins the property division analysis with a different perspective. In a community property state, there is a heavy presumption that all marital property should be divided equally between the parties in a strict 50% / 50% fashion.
This is the primary difference between community property states and equitable distribution states. In a community property state, the conduct of the parties during marriage doesn’t carry as much weight as it does in an equitable distribution state.
This is because the property division analysis in community property states doesn’t focus as much on fairness, but instead focuses on equality between the former spouses.
In property division, only marital property is subject to distribution. Separate property will remain the exclusive property of the original owner.
The analysis in property division, therefore, basically begins with a classification of all the marital property owned by the parties.
When it comes to marital property, there are two basic rules which readers should take away: (1) any property acquired during marriage is presumptively marital property, and (2) contributions to separate property made by the non-owner may render the separate property partial marital property.
Let’s look at these rules in practice. If one spouse purchases an automobile during the marriage, then that automobile is considered marital property.
There is very little ambiguity about this fact. However, suppose that one spouse owned a house prior to the marriage, and this spouse continues to hold the property in his or her name separately throughout the marriage.
This property would be considered separate property. However, suppose that the other spouse made substantial contributions to the house during the marriage, and consequently the value of the house increased.
This increase in value would ordinarily be regarded as marital property, and consequently the house itself would be considered partial marital property.
There are a few additional guidelines when it comes to differentiating marital property from separate property. If property falls into one of the following categories, then you can typically classify it as separate property:
Another point which readers should keep in mind is that separate property can be converted to marital property. In some cases, the conversion can be intentional, and in other cases it can be unintentional.
A good example of an intentional conversion is when a spouse changes the title to a piece of separate property.
This may happen frequently with houses, for instance. If a spouse changes title to a house which was acquired prior to marriage, this would almost certainly indicate that the intention was to convert the house to marital property.
An example of an unintentional conversion would be a spouse mixing funds received via inheritance in a joint bank account.
When the inheritance money is commingled with other funds in the bank account, the presumption is that the inheritance money becomes marital property. If separate property is unintentionally converted to marital property, there is a chance that the original owner can still preserve the property as separate.
To do so, the original owner will need to substantiate, ideally with documentation, that the intention was to keep the property as separate from marital.
After all marital property has been properly classified, the next step in the property division process is to assess value. In many cases, value assessment will be straightforward.
This is the case with a liquid bank account, for example, any many other types of personal property. For an automobile, for instance, the court can simply reference a well-known trade publication on automobile market value. In other cases, the services of an appraiser may be necessary.
This is frequently the case for houses, or for other kinds of property, such as a business or professional practice.
After classification and assessment, the next step in the division process is the actual distribution. Unless the parties themselves decide independently, the court will step in and play a role in this process.
To distribute the marital property, there needs to be a determination of how much each spouse will receive. This is where the theory of equitable distribution comes to the foreground. Judges will review all the relevant circumstances and then make a determination which is fair based on those circumstances.
Some factors that judges will consider are the contributions of each spouse to the totality of the marital property, the contributions of each spouse as a homemaker, each spouse’s other contributions during the marriage, the current economic situation of each spouse at the time of the divorce, and other factors as well.
After the determination regarding the equitable share of the marital property, the division will then proceed as follows: property will either be assigned in kind, or it will be sold off for the proceeds.
The sale proceeds will then be distributed in a manner consistent with the order of the court. In many cases, personal property will be assigned, because assigning personal property in kind is usually the most logical course of action.
When it comes to houses, frequently the most logical course of action is to sell the house and distribute the proceeds. In other cases, however, the house may be assigned, and then the recipient spouse will compensate the other spouse for his or her share of the house’s value.
Another thing which readers should be aware of is that debt obligations are also subject to distribution.
Debt obligations which are incurred during the marriage are basically considered marital property, and therefore may be divided between the parties just like other property.
If a debt is incurred during the marriage, then typically a judge will determine that both parties will remain liable for the debt following divorce. There may be cases, however, in which responsibility for a given marital debt is assigned solely to one party.
This may happen with a mortgage, for instance, when a house is assigned to one party; the spouse who acquires the house following divorce will be solely responsible for the mortgage payment moving forward.
A marital debt may also be assigned specifically to one party depending on its origin. For example, if one spouse racks up a large balance on a credit card, and the other spouse had no knowledge of the balance during the marriage, a judge will likely assign this obligation solely to the party who incurred the debt.
Another point to keep in mind is the fact that even debts which are assigned to one party can adversely affect the other party.
This can happen if the responsible party fails to pay for a debt which still shows both parties as holding responsibility.
If a credit card which was jointly owned becomes the sole responsibility of one party following divorce, the credit of both parties can suffer is the responsible party fails to take care of the obligation.
The bottom line is that a court will perform the same type of analysis on marital debts as it performs on other types of marital property. This means that if fairness dictates that a certain debt should be assigned to one party exclusively, then that is the likely outcome.
We’ve alluded to the fact that parties have the ability to determine everything regarding their property division independently.
This needs to be emphasized. Everything we have discussed regarding equitable distribution, classification, assignment of property, and so forth, assumes that the parties were unable to develop an independent agreement on property division.
Court involvement can essentially be bypassed provided that the parties agree on their own on a fair division of property. If parties can reach an agreement through mediation, this will also bypass the need for litigation.
Property division is one area which tends to be particularly contentious, however, and so litigation is often required. This is especially true for situations involving marital property of high value.
Property division is commonly the lone area in which parties need court involvement, and so familiarizing yourself with the court procedures of property division is worthwhile.
Hopefully, this overview has given readers a good sense of how property division works within the Maine family law system.
As we discussed, Maine is not a community property state, but instead follows the equitable distribution theory when it comes to division of marital property.
Readers should also come away with a good sense of how marital property is classified, and how the division procedure will proceed after classification.
The attorneys at The Maine Divorce Group understand how emotional and complex the divorce process can be and we are here to help.
Call to speak with a member of our team today, who can discuss your case and set up a consultation with one of our attorneys.
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