Marital Property

At the final hearing on the Complaint for Divorce, the Court is required to set apart to each spouse his or her separate, non marital property and to divide the marital property in such a manner as the Court deems just and equitable. This means that Maine is an "equitable distribution" state. This also requires the Court to distinguish marital property from non marital property. Under Maine law, "marital property" means all property acquired by either spouse after the marriage except

1) property acquired by gift, bequest, devise or descent; 2) property acquired in exchange for property acquired by gift, bequest, devise or descent; 3) property acquired by a spouse after a decree of legal separation; 4) property excluded by valid agreement of the parties; or 5) the increase in value of property acquired prior to the marriage.

Thus, Maine law presumes that all property is marital unless one party proves that a particular item of property is non marital. A particular item of property may have both martial and non marital components. In that event, the Court must set aside to the prevailing party that portion which is non marital and equitably divide the marital component of the property.

Over the past several years, the Maine Supreme Judicial Court, also known as the Law Court, which reviews the decisions of the lower courts, developed several rules as aids in distinguishing non marital and marital property. In 1997, the Court issued a decision in Long v. Long, 1997 ME 171, that reversed previous decisions apportioning jointly held real estate into marital and non marital estates as a result of alleged non marital contributions to the acquisition of the real estate. Thus, with regards to real estate, the current law is that if real estate is held in joint ownership, it is marital property regardless of any non marital contribution to its acquisition. Because Maine is an equitable distribution state, parties can still argue for a larger portion of the real estate because of a non marital contribution. However, there is no longer an issue with regards to the characterization of the property as marital or non marital.

Because Long specifically addresses real estate, there may still exist arguments with regards to the characterization of property other than real estate. In fact, in the 2001 Chamberlain case (2001 ME 167), the Court held that “in contrast to our holding in Long, we have never held that deposit accounts are subject to such automatic treatment as marital assets when funds are placed briefly in accounts, and we decline to do so now.” Thus, the previous definitions created by the Law Court may still be applicable in those situations, although it would be the exception rather than the rule. These previous definitions include: 1) The "inception of title" rule focuses on the state of the title to property when it is first purchased; 2) the "transmutation" rule holds that non marital property may be transformed into marital property. The transmutation rule does not apply to transfers prior to January 1, 1972, which was the effective date of the revised marital property statute; and 3) the "source of funds" rule grants to each estate an interest in proportion to marital or non marital contributions made toward the acquisition of the property.

The exception which provides that property acquired in exchange for property acquired prior to marriage or in exchange for property acquired by gift, bequeath, devise, or descent is embodied in the "source of funds" rule. Thus, in a divorce, the Trial Court does not rely on who holds legal title to property. Instead, it looks to the source of funds that were used to create the value the property now has to the parties. The marital and non marital interests in property are determined by comparing the ratio of marital and separate contributions to the acquisition of property.

Previously, a spouse claiming that a non marital asset has increased in value during the marriage and that this increase in value was marital, had the burden to prove that the asset increased in value because marital money or efforts were invested in the asset rather than simply because the inherent value of the property itself increased. Two cases, however, shifted this burden of proof: Harriman and Clum held that income, even if from a non marital asset, was marital. The individual asserting that the asset was non marital had to prove what portion of the increase in value was “passive,” thus the increase attributable to the “income” being reinvested in the asset would be marital. Legislation passed in 2000 specifically reversed the marital / non marital aspect of Harriman and Clum: To the extent that a party demonstrates that the increase in value of a spouse's non marital stock resulted from “market forces,” the increase in value is non marital property regardless of whether the spouse or spouses played a substantial active role in managing the stock. In addition, to the extent that a party demonstrates that the increase in value of a spouse's non marital stock resulted from reinvested income and capital gain, the increased value is non marital property unless it is also established that either or both spouses had a substantial active role during the marriage in managing, preserving or improving the property. In October of 2002, the Law Court issued a decision in Warner v. Warner which provides an excellent treatise on this, and other, financial issues in divorce.

The current state (and simplistic summary) of the the burden of proof with regard to marital / non marital property is: 1) If property is acquired prior to the marriage, or subsequent to the marriage by gift, bequeath, or inheritance, it is presumed to be non marital; 2) the opponent to this claim then has the burden of proof to show that the property has increased in value during the marriage; 3) the claimant then has the burden of proof to show that the increase in value was a result of market forces and not marital effort or the investment of marital funds. Properly proving the burden placed upon the claimant is critical to a claim that a property is non marital.

In order for the Court to equitably divide the parties' marital property, it must consider all relevant factors, including 1) the contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker; 2) the value of the property set apart to each spouse; and 3) the economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children. It is important to note that the Court is not allowed to consider fault in the distribution of property.

Finally, as the Law Court has repeatedly stated, equitable does not necessarily mean equal: The Court is not compelled to divide the marital estate equally, and, in fact, a Court which automatically does so could be in error.