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Tips for Keeping Your Separate Property Separate - Cameron C. Goulding

Posted by Cameron Goulding | Mar 05, 2021 | 0 Comments

In a Michigan divorce, marital property is subject to equitable division. The term “equitable” means that the property division should be fair. However, “fair” does not always mean equal. A judge may not order a 50-50 split of marital property. A Michigan divorce attorney can help you take steps now to protect property that should not be subject to property division in a divorce.

Separate vs. Marital Property

Separate property is property that the spouses owned before they were married. Gifts, compensation for pain and suffering damages, and inheritance received by a spouse during the marriage are also considered separate property. Any assets or property that you and your spouse acquired after marriage is considered marital property.

Generally, separate property is not subject to property division during a divorce. However, there are some exceptions to this general rule. A spouse can convert separate property into marital property by commingling it with marital property. Using funds from separate property to maintain a home or other marital property or to purchase assets that are jointly titled converts the separate property into marital property.

Tips for Maintaining the Status of Separate Property

To prevent separate property from being subject to property division during a divorce, you need to take steps to maintain separate property status during the marriage. Tips for protecting separate property include:

Prenuptial Agreements

Entering a prenuptial agreement before the marriage is one of the best ways to protect separate property and assets. The agreement clearly states how property will be divided during a divorce. It also states which property will remain separate, even if marital assets are used to maintain or improve a separate asset.

For instance, the prenuptial agreement may state that the home you inherited from your parents and intend to live in with your spouse will remain separate property. The home remains separate property, even though you and your spouse's income will be used to pay mortgage payments or pay for upkeep and maintenance for the home.

Family Businesses

If your family owns a business, make sure that all shares in the company remain in your name. Before the marriage, review the operating documents for the business. Some operating agreements prevent shares of the business from being transferred to individuals who are not related by blood. A lawyer should review the documents before the marriage to determine if any further steps should be taken to protect your interest in the business from being considered a marital asset.

Avoid Commingling Assets

Keep separate assets separate during the marriage. Do not deposit funds into a joint account or use separate funds to purchase joint assets. Furthermore, do not use marital assets to maintain or enhance a separate property.

For example, do not use the income earned during the marriage to improve a home that you owned before the marriage or inherited during the marriage. Likewise, do not use money from a joint account to pay the taxes on separate property or make repairs to separate property.

Keep Accurate Records

Maintain records and books to prove that an asset is a separate property. For instance, if you use inherited funds to purchase assets, keep records proving that the funds used to purchase the asset were taken from your inheritance.

Contact a Michigan Divorce Attorney for Help

Maintaining the status of separate property can be challenging. The best way to protect separate property is to discuss your legal rights with a Michigan divorce attorney. Even though you do not have a prenuptial agreement, there are steps you can take now to protect your assets during a divorce, including entering a post-nuptial agreement. Contact our office today.

About the Author

Cameron Goulding

A native of Oakland County, Michigan, family lawyer Cameron C. Goulding has been providing counseling and legal services of the highest caliber to individuals and families in Southeastern Michigan for over 24 years. Mr. Goulding grew up in Oakland County, Michigan and graduated from Birmingham G...

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