The law requires that every judgment of divorce contain provisions dividing real and personal property. Real property includes the marital home and any other real estate owned by the parties during the marriage, whether by one or both. Vacation homes, investment properties, timeshares, farmland, vacant land and improvements on the real estate, and the seller’s interest in a land contract for property that has been sold are all considered real property. Personal property includes accounts, household contents, vehicles, tools, live animals, antiques and collectibles, and any other movable property. If real or personal property is held as part of a partnership or shares of a corporation, it is still property that will be considered by the court in the final judgment.
When we meet in the early stages of your divorce, you will need to provide an accurate inventory of everything you and your spouse have acquired during the marriage. In addition, try to document exactly what was owned by each of you at the time of your marriage. For example, if you married later in life and you both owned a home, furnish a description of that real estate, together with any debts owed on it at the time of the marriage. If it is still owned by either of you, whether individually or in joint, I'll need to understand the origin of this property. Take an inventory of your household furnishings, and if anything was acquired by either of you prior to the marriage, make a note of it. Also, if anything came to either of you through inheritance or gift from your family, make a note of this. The origin of property owned at the time of the divorce may determine whether it is considered part of the marital estate. If either you or your spouse has received an inheritance, a gift from family or money from a personal injury or workers’ compensation settlement, let me know.
I like to use the analogy of a pie when I discuss property settlement with my clients. If the marital estate is represented by the whole of the pie, each of you will receive an equitable portion of that pie. In addition, there may be other assets in your household that fall outside of this pie. This may be considered separate property because it was acquired by either of you prior to the marriage, or if it came to one of you through inheritance or individual gift from a family member. Because the value of the marital estate may fluctuate over time with changes in the market, the court will exercise discretion on what date to value the assets. In the early stages of your divorce, you should make every effort to place a value on your assets, so we can begin to envision what the property distribution might look like.
Michigan is a marital property state, meaning that property in the marital estate is subject to equitable division,which in most cases, but not all, means equal division. Property outside the marital estate, sometimes called separate property, is usually awarded to the party who owns it. Sometimes the issue of whether a particular asset constitutes separate property is debated by the attorneys and must be settled by the court. Under certain circumstances separate property can be considered part of the marital estate, subject to division. The most common way this occurs is when the non-owner spouse is able to prove that he or she contributed to the “acquisition, improvement, or accumulation” of the asset (see Michigan Compiled Laws section 552.401), or in the case where, considering all the circumstances, the non-owning spouse is in need of support, and assets in the marital estate are not sufficient to provide for this (See Michigan Compiled Laws section 552.23).
A common example of the first scenario is when a couple acquires a piece of real estate, often a recreational property such as a lakefront cottage, as an inheritance from one spouse’s family. During the marriage, they enjoy family vacations at the property for many years. Of course, with the benefits of ownership come the burdens. Over the years, they remodel and expand the cottage, maintain it, landscape, improve the waterfront, and pay significant non-homestead taxes, all financed with marital funds and labor. Twenty years later, the little fishing cabin they inherited from Uncle Frank is now a sprawling year-round waterfront home worth a million dollars. Under this scenario, the non-owning spouse would likely convince the court that she meets the statutory requirement of having contributed to the asset’s improvement or accumulation. Therefore, this property will most likely be equitably divided. In many cases, the spouse who brought the asset into the marriage by means of inheritance may receive a larger portion of the asset, but the appreciation, which may be due in part to joint efforts and financing, may be equally divided.
The second scenario under which separate property may be awarded to the non-owning spouse is when the marital estate is insufficient for that spouse’s “suitable support.” In some cases, for example, where the parties are retired, there may be no current earnings stream to pay spousal support. In that case, the court may look to separate property assets and award them to the non-owning spouse as a means of support.
I encourage you to read more about how real property and personal property are divided in a Michigan divorce. If you or your spouse is considering divorce, I welcome you to learn more about my 25+ years of practice as a Holland, Michigan divorce attorney and My Promise to You as a client. I offer family law services in Holland, Grand Haven, and throughout Ottawa and Allegan Counties and the West Michigan Lakeshore region.
© 2020 Thomas C. Kates, Attorney and Mediator