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Michigan Family Law Blog

Wednesday, September 27, 2017

Determining What is and What is Not Marital Property

If you are going through a divorce in Michigan, you may be worried about how the divorce will impact you financially. Divorce can be devastating to a person’s finances in both the short-term and the long-term. You will get to keep the property the court decides is your separate property, but the court will distribute the marital property between you and your spouse. This article will help you in determining what is and what is not marital property in Michigan, and it’s never a bad idea to talk to a divorce lawyer experienced with property division.

The marital and separate property evaluation process takes two steps. First, the court identifies all separate property and sets it aside to the parties. Under Michigan law, separate property is not part of the marital estate, and the judge will not divide it between the parties. Instead, the court will award the entire asset to the party to whom it belongs as separate property.

Second, after all the separate property has been set aside to each party, the court will divide the marital property using factors developed in the Sparks case, Sparks v Sparks, 440 Mich 141; 485 NW2d 893 (1992). The court will try to achieve an equitable distribution using these seven factors:

  1. Length of the marriage
  2. Needs of the parties
  3. Needs of the children
  4. Earning power of the parties
  5. Source of the property
  6. Source of the contributions toward acquisition of property
  7. Cause of the divorce, which includes who was at fault in the breakdown of the marriage.

The distribution of assets can have secondary consequences. For example, if a person does not want to pay spousal support, she can agree to an allocation of more than 50% of the marital assets to her spouse, if doing so eliminates that party’s financial need for support.

In general, assets earned during the marriage are marital property, whether the party receives the assets during the marriage or afterward. Assets earned after the marriage is over are separate assets. Separate property usually includes assets a party owned before the marriage, as well as things the person received during the marriage by gift or inheritance. Separate assets can also be items a party receives after the divorce, as well as assets or appreciation traceable to separate property.

Divorcing parties in Michigan used to squabble over whether marital property included assets received by the parties when they were living together before marriage, during periods of separation, or after a party filed for divorce. The law in Michigan is now clear on this issue. Marital property is property earned during the marriage, with marriage defined for this purpose as beginning on the wedding day and ending on the date of the divorce judgment. Cohabitation and separation are currently irrelevant when it comes to marital property.

Equally important are the marital and separate debts of the parties, as debts will impact the true financial condition of each party. Debts are also called “negative assets.” They should be considered when determining the equitable distribution of the marital property.

The laws in Michigan that govern marital and separate property change with each new court decision. This area of law is extremely fluid in Michigan. To protect your rights and your assets, contact Michigan spousal support attorney Cameron C. Goulding today to schedule a consultation.

 


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