Property Division in Michigan Divorce Cases
Michigan divorce law recognizes two different types of property: Separate property and marital property. Understanding the difference and how separate property can become marital property is important to knowing how your assets will be divided in a Michigan divorce.
What is Considered Separate Property in a Michigan Divorce?
Separate property is any property owned by either party prior to the marriage, and some property acquired during the marriage by gift or inheritance. Separate property is normally awarded to the party it originally belonged to. Separate property can become marital property. If separate property is commingled, or mixed, with marital property it may be considered marital property at the time of division.
For example, you may own a sports car prior to getting married. Under most circumstances, you would retain ownership of the car during the division of property. If, however, your spouse and you purchase a sports car together, then that can be considered marital property.
If your parents passed away and left you the sports car during your marriage, then that would most likely still be considered separate property, and you would retain ownership. The source of the property is important in Michigan divorces, and this source would have preceded your marriage, even if you didn’t come into possession until you were already married.
What is Considered Marital Property in Michigan Divorces?
Marital property is any property, or debt, acquired during the marriage (from the date of the wedding until the judgment of divorce is entered). Marital property is subject to division between the parties.
Often, a house will be purchased during the course of a marriage. The house would be marital property and subject to division. When divorcing, couples will sometimes sell their home and then split the proceeds. Or, one spouse may keep the home, while the other receives other assets, such as money in joint bank accounts, as a way of keeping the property division equitable.
As we discussed above, inherited property is usually considered to be separate, even if it is bequeathed during the course of a marriage.
Commingled Property in Michigan: What it is & How it Impacts Property Division
Sometimes, even inadvertently, your separate property could become commingled property, which essentially turns it into marital property. Recently, a case in Saginaw County saw how a spouse accidentally commingled their property and it ended up being subject to property division.
Essentially, the husband’s family owned a fairly successful business. The wife worked for the company, and the company gave her 10% ownership prior to the couple being married. The wife had the proceeds from the stock in this company deposited into her own bank account. However, in the course of their 16 year marriage, the wife used some of this money to pay the mortgage on the couple’s marital home, and other marital property. The Michigan Court of Appeals ruled that because the account was used in the furtherance of their joint marital property goals, the account AND the ownership share in the company were subject to property division.
The lesson from this case is that separate property must be explicitly separate. So, if you think you may end up getting divorced, it is definitely wise to keep some property explicitly separate, especially if you do not want to lose it in a Michigan divorce case.
How is Property Divided in Michigan Divorces?
Property division in Michigan follows the rule of equitable distribution. This means that rather than dividing the property equally, property will be divided “equitably” or fairly. There is a presumption that the division will be roughly equal, and a court must clearly explain its reasons if it decides to deviate from the “roughly equal” guideline.
There are numerous factors that courts consider when dividing property. The most common factors considered are:
• the source of the property;
• contribution toward its acquisition;
• the number of years of married life;
• the needs of the parties and the children;
• the earning power of the parties;
• the cause of the divorce;
• general principles of equity; and
• any other factor the court deems relevant.
Courts most frequently depart from the “roughly equal” model of property division in short-term childless marriages; in cases in which there is significant separate property; or in cases in which one party has greater need.
In longer-term marriages, or those in which the parties have changed their positions in reliance on the marriage, such as by having children or sacrificing career or educational progress, courts are less likely to try to return the parties to their premarital status and more likely to compensate one party for their sacrifice for the family.
Property division and support issues are closely related. If a party needs support, a property settlement can award that party more than half of the assets, in lieu of, or in addition to, support payments.
The reasoning for this is to ensure that the parties can have similar standards of living without forcing one party to have to dip into their property award to survive, while the other can live on their income and enjoy the benefits of their property award.
Most property is divided by the parties working with their family law attorneys and made part of a settlement agreement. Property division is one of the areas in a divorce with the most room for negotiation.
A final property division can usually be worked out with the help of a domestic relations mediator, who facilitates discussion and negotiations between the parties.
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