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How is Property Divided When You Get Divorced?
Michigan is a no-fault divorce state, which means if one person wants a divorce, the court will grant a divorce without any need for a showing of fault within the marriage. People contemplating divorce often inquire as to how property will be divided by the courts in Michigan. Unless there is an enforceable prenuptial and/
or postnuptial agreement between the parties, the court will make an “equitable” division of marital property. If there are no prenuptial/postnuptial agreements, the judge assigned to the case will review the matter and determine a fair division
of the assets and/or debts of the marital estate. For the most part, the court will likely split the assets and the debts of the marriage on a 50/50 basis, unless there is a determination that this split is not fair for the parties.
Marital Assets vs. Separate Assets
Most people are confused about what qualifies as a marital asset. Some people believe that ownership is determined by the name on the property such as a title to a vehicle or a deed to real estate. The name on the property does not automatically dictate ownership. The minute the vows are complete and the marriage is legal, every dollar acquired during that marriage is shared evenly or 50 cents on the dollar per spouse. Also, every debt acquired after the marriage is also shared evenly between the parties. For example, whether a vehicle was
purchased and titled exclusively for the use by one spouse over the other is completely irrelevant; the court will likely split that asset 50/50 between the parties. Most people mistakenly believe that pension plans and retirement investments such as 401ks are separate property not to be shared with their spouse simply because it was contributed to by only one spouse versus the other. That is a myth and simply untrue. Those investments will also be divided based on the growth of those investments by contributions during the marriage and will be split amongst both parties by the court as well.
Exceptions to the Rule
There are, however, assets/debts that may qualify as separate property not subject to division by the court. Those separate assets/debts must have existed before the marriage and not have been comingled with other martial assets. For example, if before the marriage there are stock investments or bank accounts, those assets will remain separate assets, as long as those accounts exist separately throughout the marriage and there are no contributions of money earned during the marriage into those accounts. If it can be shown that those accounts remained separate from the marital assets, those assets may remain separate and most likely not be divided by the courts between the parties. If a spouse actively increases the value of separate investments such as stocks, bonds, etc., by actively trading and reinvesting, it
may be argued that the separate investment is martial and should be split between the parties. This, of course, will be decided by the judge, based on his/her review of fairness. Passive assets are easier to prove as separate property. Another example of separate property may be an inheritance from a relative, as long as the relative does not name the spouses to inherit the property jointly and, again, the inheritance remains separate from marital assets. Martial money contributed to invest into the inherited property, for example, renovating an inherited home with marital assets, may take the property out of the separate property category. The future proceeds of existing lawsuits for workers’ compensation benefits, social security disability claims, or any other liability litigation may also be subject to division if those lawsuits seek recovery for work-loss benefits or some type of disability benefits that reimburse for loss of income during the marriage. Just because the award may be received after the divorce is final does not preclude it from the marital estate.
To really accurately evaluate whether an asset or debt is martial or nonmartial, you will need to consult with a professional, such as an attorney. An attorney can review the evidence and advise you, based on the information provided, whether the asset is likely or not likely to be a martial asset or debt. However, ultimately, it will be the judge assigned to your case who will decide.