As unpleasant as it may be to think about, sometimes marriages end up in divorce. A marriage ending doesn’t need to cause major financial harm, though. It’s imperative to know the divorce laws in your state if you think that’s what might happen, though. By doing this, you can ensure that you plan properly and get a fair deal. This becomes even more important if you have children, plus you’ll want to protect your retirement money as best you can. If you need help with your finances in the aftermath of your divorce, consider working with a financial advisor.
To file for divorce in Maryland, at least one of the spouses must have been a Maryland resident for at least six months prior to filing. Maryland also requires the divorcing couple to have lived apart for at least 12 months, unless there are extenuating circumstances, known as “fault grounds.” We go over these more below.
There are both no-fault and fault divorces in Maryland. There are two no-fault grounds for divorce: living apart for 12 months or mutual agreement. For a fault divorce, one of the following grounds must be present:
To start a divorce, the plaintiff, or the person who’s requesting the divorce, must fill out and file two forms with the state circuit court. These correspond to the county in which they live.
Once the divorce forms are filed, the other spouse, or the defendant, is served with the divorce papers. A friend of the family, a county sheriff or a private process server are the only ones who can hand over these papers.
The defendant must then file an answer to the divorce complaint, in which they can confirm or deny any of the claims in the initial filing. The defendant may also file a counterclaim.
If the divorce is relatively amicable, the parties can work with a mediator prior to even filing for divorce. If this works, they can complete a consensual separation agreement that details the splitting of assets or care of any children. After the 12-month period of living apart is met, the couple can then have an uncontested divorce.
If the divorce is contested, though, after filing there will be an attempt at a settlement. Lawyers for both parties will try to come to an agreement that is acceptable to both spouses. If they cannot agree, then a trial becomes necessary. There will be discovery, which entails attorneys for both sides obtaining testimony and documents from the other side. After discovery, each side will present testimony explaining their case on issues regarding marital assets, child custody, the effect of one spouse remarrying and any alimony.
The judge then makes a decision about whether to grant the divorce to the plaintiff, and makes decisions regarding child custody, property distribution and, possibly, alimony. This may require the assistance of appraisers for items like jewelry, or a CPA or actuary to determine the value of a financial investment or retirement account.
Maryland is an “equitable distribution” state, meaning the court does not have to divide property equally between the spouses. This leaves some judgment to the court as to determining what’s fair.
In Maryland, marital property includes all assets that belong to a marriage rather than separately to one spouse. Any property acquired during the marriage is deemed marital property, though the judge may make an exclusion for a gift or inheritance.
Property acquired before the marriage is deemed “separate property” and is not part of the divorce settlement. Likewise, property that’s part of a legal document, like a prenuptial agreement, is separate property.
If the case cannot settle through mediation, the judge will make the decision of how to split the marital property. This includes the treatment of any pensions. After the establishment of all marital property, the lawyers will make their case for why their client deserves certain things.
There is no specific formula for dividing property in a Maryland divorce. The judge can consider a number of factors, including the length of the union, each spouse’s contribution to the procurement of the assets (including support in the form of one spouse being a homemaker or stay-at-home parent), the value of the separate property and the economic circumstances each spouse will face after the divorce.
The court will consider a long list of factors in deciding if you or your spouse should get alimony. These factors include:
Maryland courts have wide discretion in determining whether any alimony is necessary and, if so, what kind. There are three kinds of alimony in the state, with the first being “pendente lite support.” This only requires one spouse to pay support to the other for the duration of the trial.
The second is called “rehabilitative support,” which is a temporary order of support paid for a set time period while the spouse being supported receives the help or training needed to support themselves. For instance, if one spouse didn’t work during the marriage to attend to raising a family, they might get rehabilitative alimony while they receive the necessary job training or get a degree.
The final type is permanent support, which means payments for life. This is when the judge rules that one spouse cannot be financially independent. This support ends if either spouse dies or if the spouse receiving support remarries.
The judge determines the amount of alimony paid based on a number of factors, including whether the spouse receiving the support can become partially self-supporting, the standard of living during the marriage, the length of the marriage and the reasons for divorce. After the divorce, if the spouse paying support has a change in financial circumstances, he or she can ask for a review of the alimony agreement.
For child support, Maryland uses the “income shares” model. This means that the court estimates the money spent when the family lives in the same household and divides that based on the earnings of each parent. Therefore, each parent is assigned a support amount. Child support is not deductible on Maryland state tax returns.
If a workplace retirement account is a marital asset, the court will issue a qualified domestic relations order (QDRO) so that the relevant portion of the account is taken out and given to one spouse as part of a divorce settlement. This won’t incur the penalties that premature withdrawal from these accounts normally does.
Individual retirement accounts don’t require a QDRO. The divorce settlement, though, will have to include specific language that declares the money to be transferred from the account. This is done to avoid and minimize taxes and fees.
If you have an estate plan as a couple, it will likely need changes after a divorce. Both of you will need to amend where your property would go if you die, as during the marriage it was likely your spouse. You can work with an estate planner to come up with a new plan for passing your assets on to your children or any other relatives. You should also make sure to change the inheritor on all retirement and other accounts and to change any relevant medical directives.
Lastly, make sure to work with your spouse on a plan for your children in case both of you were to die.
Maryland is a state with both no-fault and fault divorce. Which one you get depends on various circumstances including the reason for divorce. After filing, you’ll either mediate, settle or go to trial to figure out arrangements for property, assets and child arrangements.
Photo credit: ©iStock.com/Elias Morr, ©iStock.com/AndreyPopov, ©iStock.com/fizkes
Ben Geier, CEPF®Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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