“Yours, Mine and Ours” is a 1968 film about a very large blended family. “Yours, mine, and ours” could also refer to the analysis that must be done for equitable distribution in a divorce. Arriving at a truly equitable distribution requires accurately determining which assets are “yours,” which are “mine,” which are “ours,” and which are a combination of the above. This can be a complex and intricate process and is one where an experienced Maryland divorce lawyer can render invaluable aid toward protecting your interests.
One type of asset that can often be the center of a marital-versus-non-marital classification dispute is real property. That was the case with one Anne Arundel County couple and a million-dollar Annapolis residence that the husband inherited.
During the marriage, the couple jointly purchased investment properties in Bowie. To secure the funding needed for the purchase, the husband put up as collateral the inherited property. The couple eventually sold the Bowie properties and repaid the loans in full. To repay those loans, the couple used both proceeds from selling one of the Bowie properties and marital funds.
In the divorce litigation, the wife argued that the inherited property was partially marital in nature.
Assets Can Change Status
Normally, an asset that one spouse inherits is considered non-marital. However, an asset can convert from non-marital to marital depending on how the spouses handled that asset. For example, non-marital funds commingled with marital funds in a marital account can change from non-marital to marital as a result of commingling.
In this case, the wife asserted that, when the husband used the property to obtain funds for purchasing jointly-owned properties, that transaction changed the property’s status. Both the trial court and the appellate court rejected that argument. The trial court decided that simply placing an inherited property (that the husband owned without a mortgage) up as collateral did not give the wife a legal interest in the property, regardless of what the couple used the loan proceeds for. The property was the husband’s and simply using it as collateral did nothing to change its status.
The appeals court agreed with that outcome. The law (Family Law Section 8-201(e)(1) says that marital property is “property, however titled, acquired by 1 or both parties during the marriage.” The Maryland Supreme Court has laid out a standard for assessing an asset’s status that says that the “characterization of property as non-marital or marital depends upon the source of each contribution as payments are made.”
Here, the husband owned the property “free and clear.” During the marriage, he used the property as collateral to obtain funds to buy other properties. He never used any loan proceeds to acquire or improve the property. (Had he done either, the wife would have acquired some degree of marital interest.) Instead, the husband used the loan proceeds to buy other properties. Those properties were ones where the wife had an interest, not the collateral property.
Arriving at a fair distribution of assets in a divorce can be a complicated endeavor. When it comes to protecting your rights and interests during the divorce process, count on the knowledgeable Maryland family law attorneys at Anthony A. Fatemi, LLC. Our detail-oriented team is singularly focused on providing you with the thorough and effective representation you deserve. Contact us today at 301-519-2801 or via our online form to set up your consultation.