Keeping Your Separate Property Separate

Michigan divorce law recognizes two types of property married couples own: marital and separate. While we have discussed the differences before, it is helpful to know that there are ways to keep your separate property separate from your spouse.

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Marital vs. Separate Property in Michigan Divorces

While the terms ‘marital property’ and ‘separate property’ might seem like simple terms, the courts don’t always view them that way. The general rule of thumb is that separate property is anything owned by either spouse before they enter the marriage. Marital property is anything they acquire throughout the course of their marriage.

It gets tricky with property like a house. If you own a home prior to getting married, but your spouse moves in and lives with you, this property can become ‘comingled’. Over the course of time, this can then become marital property.

The main exception to this rule is inheritance. Let’s say your parents’ will bequeaths you a house. You most likely will remain in your current home, and this house that you inherited would be considered separate property. However, be careful, as using funds from a joint checking or savings account could end up making this house marital property as well.

How To Maintain Separate Property

To prevent separate property from being subject to property division during a divorce, you need to take steps to maintain separate property status during the marriage. Below are some ways you can hang on to your property during a divorce.

Sign a Prenuptial Agreement

Entering a prenuptial agreement before the marriage is one of the best ways to protect separate property and assets. The agreement clearly states how property will be divided during a divorce. It also states which property will remain separate, even if marital assets are used to maintain or improve a separate asset.

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For instance, the prenuptial agreement may state that the home you inherited from your parents and intend to live in with your spouse will remain separate property. The home remains separate property, even though you and your spouse’s income will be used to pay mortgage payments or pay for upkeep and maintenance for the home.

Keep Family Business Shares in the Family

If your family owns a business, make sure that all shares in the company remain in your name. Before the marriage, review the operating documents for the business. Some operating agreements prevent shares of the business from being transferred to individuals who are not related by blood. A lawyer should review the documents before the marriage to determine if any further steps should be taken to protect your interest in the business from being considered a marital asset.

Avoid Commingling Assets if Possible

Keep separate assets separate during the marriage. Do not deposit funds into a joint account or use separate funds to purchase joint assets. Furthermore, do not use marital assets to maintain or enhance a separate property.

For example, do not use the income earned during the marriage to improve a home that you owned before the marriage or inherited during the marriage. Likewise, do not use money from a joint account to pay the taxes on separate property or make repairs to separate property.

Keep Accurate Records of Your Property

Maintain records and books to prove that an asset is a separate property. For instance, if you use inherited funds to purchase assets, keep records proving that the funds used to purchase the asset were taken from your inheritance.

The most important tip to help you keep your separate property is to hire a Downriver divorce attorney from The Mitten Law Firm. Call us today to help you with your divorce case.

 

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