How a Non-Marital Asset May Become (At Least Partially) Marital in Nature and Subject to Equitable Distribution in Maryland

Marriages, especially those entered into by spouses with pre-established careers, can lead to complex divorces when they break down. These kinds of divorces arise when a spouse entered the marriage with substantial non-marital assets, but then also continued to grow their wealth during the course of the marriage. When a marriage like that ends in divorce, it is critical, in order to get everything you deserve, to obtain a judgment that accurately identifies what’s a marital asset and what’s non-marital. A skilled Maryland divorce lawyer can be essential to getting this done right.

The marriage of a businessman and a social worker from Montgomery County was an example of this kind of union. The marriage lasted just two years before irretrievably breaking down.

Much of the divorce litigation centered on the husband’s 401(k) plan. Before the pair wed, the husband worked for a very large bank and had a 401(k) through his employer. Shortly after he and the wife married, the husband rolled that 401(k) over into another account.

The husband argued that this money was his non-marital property. Even though he rolled the 401(k) over into a new account, the funds remained non-marital, he asserted.

Had the new account held the rollover funds from the 401(k) and only those funds, the husband likely would have had a very strong argument. However, that wasn’t what happened and so the husband’s argument failed.

The account that held the rollover funds from the husband’s premarital 401(k) also contained other things. Specifically, the husband made additional contributions to the account during the two years that the couple were married. Those contributions were derived from income the husband accrued during the marriage, which meant that those additional contributions were marital assets.

You now may begin to see the problem the husband faced and the strength of the wife’s argument. That problem (or key, depending on one’s perspective) is a legal concept known as “commingling.”

When Does an Asset Become ‘Commingled’?

In divorce law, you generally are entitled to exit a marriage with those things that were yours and yours alone prior to the marriage. Wealth that you acquired during the marriage is subject to equitable distribution. If an asset is part marital and part non-marital, then it is also subject to equitable distribution.

“Commingling” is something that happens when you enter a marriage with a non-marital asset but then grow or improve it with marital assets. This can happen in a lot of different scenarios. For example, say you enter the marriage with a house that you alone own. During the marriage, you decide to replace the roof, the siding and the windows, and also update the kitchen and bathrooms. To pay for this work, you use a savings account to which you contributed funds that you earned during the marriage.

Guess what? These choices likely amount to commingling and likely would expose the house to equitable distribution in a divorce. Because you added funds to the savings account while you were married (which are marital assets,) then that made the savings account marital in nature. When you used funds from that account to improve the house, that action could give your spouse a strong argument that the house was a commingled asset and subject to equitable distribution.

In this Montgomery County couple’s case, when the husband added additional funds to the account during the marriage, that amounted to commingling. Because the account, therefore, was a commingled asset, it was subject to equitable distribution.

Just because your spouse came into the marriage with an asset that was their non-marital property at the time of the wedding does not necessarily mean that that asset isn’t (at least partially) marital by the time you divorce. When it comes time to seek a divorce judgment and equitable distribution, look to the experienced Maryland family law attorneys at Anthony A. Fatemi, LLC to be the powerful and effective advocate you deserve to get you everything the law says you should receive. Contact us today at 301-519-2801 or by using our online form.

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