Spouses preparing for divorce have to think carefully about the future. The choices they make during divorce can affect their finances and family circumstances for years to come. In Michigan, most property and income acquired during a marriage is subject to division during a divorce.
Unless spouses already signed an agreement outlining property division terms, they have to negotiate financial settlements with one another or prepare for litigation. Equitable distribution rules apply to the marital estate, but either spouse may be able to protect certain resources by showing that they are separate property.
What assets can spouses expect to retain when they divorce in Michigan?
There are several kinds of separate property
Unlike many states, Michigan does not have statutory standards for separate property. Instead, common law practices and judicial precedent determine what assets remain separate. Being the sole account holder or the only person named on ownership documents does not mean that a spouse can claim assets are separate property. They have to prove that specific resources are not part of the marital estate.
Typically, spouses can retain assets that they owned before marriage as separate property when they divorce. They must be careful to avoid commingling or the process of combining marital property with separate property.
Individuals who own homes or businesses before marriage often put them at risk of division by using marital resources to maintain or improve those assets. However, provided that people are careful to avoid commingling, the property that they already owned before they got married remains their separate property after they divorce.
Gifts received during the marriage given directly to one of the spouses are also usually separate property. Inherited assets also typically remain separate. So long as the spouse who received an inheritance did not deposit funds into a shared account or add their spouse to the ownership documents for those resources, they can retain sole ownership of their inheritance after divorcing.
People may need to go over their household financial records carefully to determine what is separate and what is marital. They may also need to brace themselves for conflict related to separate property in some cases.
Those who understand their rights and the rules that apply during property division proceedings may be able to establish a foundation for a better financial future when they intend to divorce. Protecting separate property can be a key element of the property division process in an upcoming divorce.