"Source of funds" rule for property division

[samserif]

What is the name of your state? Maryland

I'm trying to understand the "source of funds" rule for property division in Maryland. I understand the classification of marital and nonmarital property, and I also understand the basic principle behind the rule, but I'm not sure of the calculation and an example would be extremely helpful.

For example, suppose that I came into the marriage with a house valued at $300,000 with a mortgage of $250,000. During the marriage the value of the house rises to $600,000 and the mortgage is reduced to $225,000. My understanding is that the percentage of the house that's considered nonmarital is $50k/($50k + $25k) = 66.7%, which is the ratio of the nonmarital contribution ($50k) to the total contribution ($75k). The nonmarital portion of the equity (which is would be $600k - $225k = $375k) would be 66.7% times the equity, or $250,000, and the marital portion would be the remainder, $125,000.

Is this right?What is the name of your state?

 

[LdiJ]

What is the name of your state? Maryland

I'm trying to understand the "source of funds" rule for property division in Maryland. I understand the classification of marital and nonmarital property, and I also understand the basic principle behind the rule, but I'm not sure of the calculation and an example would be extremely helpful.

For example, suppose that I came into the marriage with a house valued at $300,000 with a mortgage of $250,000. During the marriage the value of the house rises to $600,000 and the mortgage is reduced to $225,000. My understanding is that the percentage of the house that's considered nonmarital is $50k/($50k + $25k) = 66.7%, which is the ratio of the nonmarital contribution ($50k) to the total contribution ($75k). The nonmarital portion of the equity (which is would be $600k - $225k = $375k) would be 66.7% times the equity, or $250,000, and the marital portion would be the remainder, $125,000.

Is this right?What is the name of your state?

I have absolutely no idea if that is right or not. I am not familiar with the Maryland "source of funds" rule that you are talking about.

However, the way that I would normally calculate the marital interest in a home, would be much simpler than that. If there was 50k equity before the marriage, and 375k equity after the marriage, then I would say that the marital equity would be 375k - 50k = 325k.

 

[nextwife]

Depends upon whether marital funds were being used to make the mortgage payments. If he used premarital, or non-marital funds (example, trust fund money), then the results may be different.

 

[samserif]

Thanks!

I've found many descriptions and examples of the Brandenburg rule, which is used in Virginia and some other states to divide property into marital-vs-nonmarital portions, but Maryland's source of funds rule is apparently different.

I've gotten two quick, confusing, and different explanations from two different Maryland lawyers, and when I asked each of them for written references that I could sit back and ponder until I was clear -- well, I didn't get any, nor could I find any examples after extensive online searches. I'd prefer to find an example online rather than paying a lawyer $350/hour to tutor me on what ought to be straightforward calculations.

And yes, the funds used during the marriage would be wages earned and thus considered marital funds. Thanks again!