Marital and Separate Property in Michigan

Scale with coins and houseIf you’re getting divorced in Michigan, you know that part of the process is the division of marital property. What you may not know is exactly what “marital property” means. Not all property that belongs to you and your spouse is marital, and before a judge can divide it up, he or she will need to determine what is marital and what is separate property. Separate property is not subject to division in a divorce, so classifying an asset as “marital” or “separate” can make a big difference to how much you end up with in your divorce.

Let’s take a look at the basic rules surrounding marital and separate property in Michigan, and what you can do to protect your interests in a divorce.

What is “Marital Property?”

As a general rule, “marital property” is any property acquired by either spouse during the marriage, with limited exceptions. Even if one parent stays at home with the kids, and the other earns all the money that the family lives on, the money in the bank account and all the assets bought with that money is considered to be marital property.

What are the exceptions to this rule? Well, if one spouse receives an inheritance during the marriage, that inheritance is generally considered separate property. If one spouse receives damages for pain and suffering in a personal injury lawsuit during the marriage, those damages are generally considered separate property. (Note that the same is not true for damages for lost wages: that money is intended to compensate for earnings that would have been marital property; damages for pain and suffering are intended to compensate the victim for something they alone experienced.)

And, of course, property acquired by either party before the marriage is also generally considered separate property. Observe, however, that the word “generally” has been sprinkled liberally throughout these paragraphs. That’s because property that starts out separate may not stay that way, depending on how the parties treat it. Even if property is considered to be separate, there are circumstances under which it may be awarded to the other party in a divorce.

How Separate Property Can Become Marital Property

The most common way that separate property can become marital is by “commingling.” A typical scenario: Lee and Chris are married, and Chris inherits $10,000 from Aunt Edna. Chris places the money in the couple’s joint bank account, from which they both draw money for regular expenditures. Boom: the money has been commingled. It’s indistinguishable from the other funds in the account, and Chris cannot, upon divorce, insist that he get an extra $10,000 because of the inheritance. Had he placed the money in a separate account to which Lee had no access, he would have a much stronger claim that the funds were separate.

Some assets can be partly separate and partly marital. A common example is a retirement account to which one party started contributing before marriage, and continued contributing to after marriage. The court would have to determine (or the parties would have to agree) what percentage of the account was separate property and what percentage was marital, and therefore subject to division.

When Separate Property Can Be Divided in a Michigan Divorce

Here comes another “generally:” generally, once it has been decided what property is marital and what is separate property, one party’s separate property cannot be “invaded” by the other party. Yet there are two exceptions to this general rule, as well.

The first exception is if the court determines that the property awarded to the other party is insufficient for their “suitable support and maintenance.” In that case, if there is demonstrable need such that the party might be unable to support him- or herself without receiving some of the other party’s separate property, the court may allow it. This exception is written into Michigan law at MCL 552.23.

MCL 552.401 sets forth the second exception. One party may be awarded a portion of the other’s separate property if the spouse receiving the property “contributed to the acquisition, improvement, or accumulation of the property.” This exception might take the shape of a vacation cottage inherited by one spouse, which the other spouse helped renovate, significantly increasing its worth. It could also look like one spouse assuming responsibility for caring for the home and children so that the other spouse could devote all their energies to building up a business that was purchased before the marriage.

The dividing line between “marital” and “separate” property in Michigan is blurry and shifting. If division of property is an issue in your divorce, having the help of an experienced Michigan divorce attorney is a worthwhile, even an essential, investment to protect your property interests.

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