Splitting the assets. Are you getting your fair share of the marital assets? The general rule in Michigan is to split marital assets fairly or equally. The goal is to be fair, thus it will be equitable and occasionally equal.
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What is fair might not always be equal. A bank account may have had $30K before the marriage and now has $50K. The $20K will be considered a marital asset by the court, and it will be divided evenly, giving each spouse $10K. For assets like a house or a business, it would be different. Before the court can decide how to divide the assets, you must obtain their fair market value. Experts may be required to determine their fair value so that the court can divide it fairly.
What are marital property and separate property?
Marital property includes all possessions obtained during the marriage. The property can be material or intangible. Here are a few examples of what is typically treated as marital property under Michigan law:
[ a ] The home the couple bought after their wedding.
[ b ] The income the wife received while working as a hotel cashier during the marriage.
[ c ] The husband’s pension plan.
Assets acquired before the marriage are separate assets or separate property. Gifts or inheritances received during the marriage may be considered the separate property of the spouse. The spouse who bought the asset received the gift or inheritance.
An inheritance received by one spouse while still married is a separate property. If one spouse wins a personal injury case and receives damages for pain and suffering, the damages are often viewed as separate property.
Sometimes a separate property may become marital property or overlap with it. There’s enough jurisprudence to explain how this happens. Here’s one way it can happen. You used the separate property for the family’s benefit. Or, you combined the asset with marital property.
A spouse can be entitled to a share of the other’s separate property. This can happen if the spouse contributed to the acquisition of the property. It can also happen if the spouse has contributed to its accumulation or improvement.
What can be part of the split?
In a divorce, the assets of the marriage are divided. The majority of your possessions—or those of your spouse—were acquired throughout your marriage. It doesn’t matter whose name is on a title or deed if one exists. Unless it was a gift or inheritance, it is still considered marital property. Anything that is marital property belongs to both of you.
Let’s talk about two categories of marital property: retirement plans and marital homes.
Your marital home.
Your marital home is the place where you and your spouse resided while married. Who can afford to keep the house? Discuss this between you and your spouse. Usually, the spouse who owns the marital house becomes responsible for its expenses. Expenses refer to maintenance, property taxes, and mortgage payments. Only one of you might be able to afford these expenses. It makes sense for that person to continue living in the house. When neither party can afford the house on their own, the only option is to sell it and split the proceeds.
You and your spouse might be able to reach an understanding of what should happen to the house. If you are unable to come to a consensus, a mediator or attorney may be necessary.
One of two things could happen if your divorce case gets to trial. The judge chooses how to distribute your property. The judge may order you to sell the home or grant it to one of you. You and your spouse will split any proceeds from the sale if the judge authorizes one. If you owe more than the house is worth, the debt will be split between you.
Before a divorce is official, it’s customary for one spouse to leave the marital home. Sometimes people believe that when they move out, their property rights are forfeited. That is untrue. A spouse who vacates the marital home retains a property interest in it.
Your retirement plan or your pension.
A pension or retirement plan acquired during a marriage is marital property. In the event of divorce, the non-employee spouse is entitled to a portion of their spouse’s pension or retirement plan. Parties can agree to preserve their respective pensions or retirement plans. They can choose not to divide them. Giving the non-employee spouse more assets is an option. The asset should be half of the retirement benefit accumulated during their marriage.
There are divorce cases considered high-asset divorce. One partner in the marriage may not have the same financial standing as their spouse. A high-asset divorce typically happens. Factors, including inheritance, investments, businesses, and more, may be responsible for this. The process of requesting a divorce entails the discovery of these assets.
Who should receive what property? What is a fair distribution of property? These are the highlights of these divorce cases. Many high-net-worth individuals spend their entire lives accumulating wealth. With the significant amount of cash amassed during the marriage, filing for divorce may not be simple. Real property, personal property, bank accounts and other financial assets, assets from small businesses, and retirement funds are common in these kinds of divorce cases.
Your debts are included in the division.
The process of equitable distribution includes dividing debt. Prior-to-marriage debts incurred by one spouse are regarded as separate debts. An example is a student loan. They are still that spouse’s obligation. Normal household debts incurred during the marriage are viewed as joint obligations. Both spouses will be responsible for repayment. Consider your home mortgage, car loan, credit card debt, and health care costs.
Any debt attached to a specific asset would typically be borne by the spouse who obtains that asset. It eventually becomes part of the divorce settlement. An example is a mortgage on the marital home if one spouse receives sole ownership of that home. A judge will determine how to divide marital debt fairly like they do with the property.
A judge has the authority to rule a debt incurred during the marriage is not a shared responsibility. One of the partners, for instance, racked up debt from gambling during the union. Or a partner racked up credit card debt related to an adulterous romance. The court may decide the spouse incurring the debt is exclusively accountable for its repayment.
Remember that your divorce judgment is not binding on your creditors. You are still responsible in the eyes of the credit card company. You are even if your spouse is meant to be paying off a shared credit card but fails to do so. You can ask the court to order your ex-spouse to abide by the terms of the divorce. But, if you don’t step up and make the payments in the interim, your credit score may suffer.
How do courts decide what should be included in property division?
Michigan does not recognize community property. Michigan divides marital property according to the “equitable distribution” principle. Asset distribution in states with community property is intended to be as equal or close to a 50/50 split as practicable. Equitable distribution refers to an approach in the division of property. It is based on an evaluation of what is just in each situation.
In states with community property laws, the court must divide the marital estate equally. Judges in states with equitable distribution have the discretion to stray from a 50/50 split. The courts typically divide assets fairly and sometimes equally. Even though Michigan is an equitable distribution state.
The courts consider various factors when dividing marital property, such as:
[ 1 ] The origin of the asset;
[ 2 ] The duration of the marriage;
[ 3 ] The needs of the children and the parties;
[ 4 ] The parties’ financial resources;
[ 5 ] Support with acquiring it;
[ 6 ] The reasons for the divorce
[ 7 ] Common principles of equity; and
[ 8 ] Any additional factors the court finds important.
High-value divorces or divorce cases with spouses having high net worth can be a bit complicated. We have to determine the value of the asset first before we can divide them. Certain properties are harder to value than others.
Some types of property will be harder to value than other types of property. This is true in divorces involving high net worth or business assets. The parties may have to collaborate with property appraisers. Or to take extra measures to come up with a fair valuation.
Property is not always easily categorized as separate or marital property. It might be challenging for the court. More so in determining which part of the property is in the marital estate and which is separate. Especially when separate and marital assets are combined in some way. In a practice known as commingling.
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