Marital Property Division in Michigan - Who Get's what, and How Much?
In Michigan, the dividing property follows the rule of “equitable distribution.” This noes not translate directly into equal division of property, although the courts tend to favor it. Instead, this means that the court will seek the fairest possible division of property-- this generally looks like 50/50, but if the court decides otherwise, it will be specific in it's reasons.
Individual/ Separate Property or Joint/ Marital Property- What's Mine, What's Ours?
It is important to understand the distinction between Separate property and Marital property--
Separate Property – This is property that a someone owned before the marriage, any gifts or inheritances given directly to that person, or assets or appreciation traceable to these items. This would include things like owning a car before the marriage, or inheriting money from a family member while married, so long as it is not subsequently combined with marital property.
Marital Property – Marital property is property bought or acquired during the marriage, right up until the judgment of divorce is entered, even if the parties have separated or have lived apart for some period of time. If property is earned during the marriage, but is scheduled to be delivered after the marriage, it is still martial property generally speaking.
Division of Separate Property
In Michigan divorce cases, separate property is typically awarded to the individual owner unless the non-owner spouse can demonstrate their contribution to its acquisition, improvement, or accumulation.
This implies that if one spouse brings property into the marriage and the other spouse enhances or contributes its value, they may be entitled to a portion of that property in Michigan. If the marital assets are inadequate to support the non-owner spouse, the court may require the owner to share some of their separate property.
The non-owner spouse can enhance the value of separate property either directly (e.g., a wife contributing to her husband's separate property) or indirectly, such as a wife contributing as a homemaker, enabling the husband to increase the value of his business. In both scenarios, the wife may receive a share of the separate property as part of the divorce settlement.
Division of Marital Property
Dividing marital property in Michigan can be a complex process due to factors such as property accumulation, appreciation, and depreciation. To ensure rational and fair division, a valuation date is established by the divorce court. The goal is to maintain property value while preventing manipulation by either party.
Michigan courts consider various aspects when dividing marital property, including the marriage duration, parties' needs and earning capacity, contributions to property acquisition, and the reason for divorce, including fault. While fault may impact the court's decision, this is extremely rare, it cannot be the sole basis for division or used to punish a party. Furthermore, other relevant factors may also be taken into account during the property division process in Michigan.
Division of Retirement and Other Benefits
Are more in depth discussion of retirement and other benefits can be found in my prior post "The Complete Guide to Dividing Retirement and other Benefits in Michigan Divorce" Retirement benefits are typically the most significant asset in a marriage and can support both parties throughout their lives. In Michigan, every divorce judgment must address the rights of each party regarding vested pension or retirement benefits, accumulated contributions in any pension system, and non-vested pension benefits.
There are two ways to divide retirement benefits. The offset method involves giving the non-employee spouse other marital assets equal to the value of the retirement benefits, while the deferred division method allows a domestic relations order to grant the non-employee spouse a share of the retirement benefits.
If there are no other substantial assets available, the deferred division method may be the only option for a couple. Dividing retirement benefits can lead to tension, making the offset method preferable if possible.
Under the deferred division method, retirement benefits can be distributed as shared payments or separate payments, depending on the type of retirement plan and its status at the time of division.
Payments from retirement plans can be periodic or lump-sum, and a non-employee spouse may have control over disbursement or be subject to plan restrictions.
Non-employee spouses are typically entitled to benefits based on the duration of the marriage, usually (but not always) 1/2 of the marital portion of the pension, for example, if the employee had been on the job 30 years to acquire the pension, but only married 20 years, the other party would receive 1/2 of the 20 year period.
As always, Marke Gilbert and Associates is here to help. DOWNRIVER | 734-676-2700
ROYAL OAK | 248-396-0701
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