Maryland
Rule § 8-201(e) defines "marital property" as property, however,
titled, acquired by one or both parties during the marriage. Property acquired by gift, inheritance, prior to the marriage or subject to a valid agreement between the parties in not marital property. Once the Court determines what is and what is not marital property, the Court then determines the value of the property before making a marital award.
In Zanford v. Wiens, 314 Md. 102, 549 A.2d 13 (1988), the Court held that
“the critical question is not whether marital property is encumbered by a
secured debt; it is whether the debt is traceable to the acquisition of marital
property, or whether (put otherwise) the
debt’s “economic effect” is to reduce the present value of the marital property”
(emphasis added). See Zanford, 314 Md. at 108 (citing
Niroo v. Niroo, 313 Md. 226, 240-41, 545 A.2d 35, 42-43 (1988)).
It is well established that marital debt
reduces the value of the marital property.
Schweizer v. Schweizer, 301 Md. 626, 636-37, 484 A.2d 267, 272-73 (1984); Zanford, 314 Md. at 107-08; Niroo, 313 Md. at 240-41. A “marital
debt” is a debt which is directly traceable to the acquisition of marital
property, and a “nonmarital debt” is a debt which is not directly traceable to
the acquisition of marital property. Schweizer, 301 Md. at 636-37. The present value of marital property in the
parties’ possession at the time of trial must first be established in order to
reduce a marital debt from it. See Zanford, 314 Md. at 108; Niroo,
313 Md. at 240-41.
Furthermore,
Maryland courts have held that marital property cannot have a negative
value. Kline v. Kline, 85 Md.App.
28, 45, 581 A.2d 1300 (1990). If the marital debt exceeds the value of the
marital property acquired as a result of incurring the debt, the result is a
zero value for the marital property so acquired…” Id. (citing Green pv. Green, 64 Md.App. 122, 146-47,
494 A.2d 721 (1985)). Marital debt only reduces the present value
of the marital property as it exists and does not create a situation in which a
monetary award is made for property with no value.
