Is Michigan a Community Property State?

In community property states such as Wisconsin, California, and Arizona, marital assets are divided as close to 50/50 as possible.

Michigan is not a community property state. We are an equitable distribution state, or what is called a dual property state, dual because there are two categories to look at when dividing property in a divorce: separate property and marital property.

In an equitable distribution state such as ours, a family law judge seeks to divide marital assets in a way that is fair and equitable. A primary focus of this analysis is to look at two different categories of property- marital property and separate property. Marital property is that property acquired during the marriage through the efforts of one OR both spouses. Marital property is NOT things like an inheritance, but is anything earned or purchased during a marriage such as a house, vehicle, investment, savings or retirement account. Marital property can be in one name or joint names.

Separate property would be something like an inheritance, or property that you owned before the marriage.

What is Equitable Distribution?

In ideal circumstances, the soon-to-be ex-spouses would negotiate the division of property without the need for a family law judge’s involvement. However, many divorce cases lead to disagreements, making a judge responsible for final decisions if the spouses cannot agree.

As an equitable distribution state, assets are not split directly down the middle. Instead, marital property is divided in a way that a family law court believes is fair and just.

When assessing the fairness of the property division in divorce proceedings, a family law judge will consider several factors, including:

  • Debts owed by each spouse.
  • Each spouse’s income and personal property.
  • How long did the marriage last?
  • Tax consequences in relation to asset division.
  • The age of each spouse.
  • The custodial parent’s need to occupy the primary residence.
  • The physical and mental health of either spouse.
  • Ways an individual spouse directly or indirectly contributed to the other spouse’s educational or professional pursuits.
  • And any other factors that may be considered just and proper.

However, the goal is to achieve a fair division of marital property, so as close to 50 percent each as possible.

What Assets Could Be Subject to Division in a Michigan Divorce?

Michigan law defines assets such as bank accounts, retirement funds, pensions, real estate property, motor vehicles, investment accounts, businesses, jewelry, antiques, art, and other valuables.

Any property of significant monetary value acquired during a marriage is generally considered a marital asset subject to property division between spouses in Michigan. This includes assets solely owned by one spouse AND those jointly held.

It is hoped that the two spouses will reach an agreement on property division; however, if an agreement is impossible, a judge will seek to split the marital assets equitably.

What is the Difference Between Separate and Marital Property?

When going through divorce proceedings, it is important to understand the difference between separate property and marital property.

Marital property includes any property, assets, or possessions acquired either jointly or individually by either spouse over the course of the marriage. This may include (but is not exclusive to) equity in the marital home, vehicles purchased together, joint bank accounts, and retirement accounts accrued during the marriage.

Separate property relates to assets brought into the marriage by one spouse prior to the marriage or after legal separation. Additionally, certain inheritances and gifts intended for one spouse may be considered separate property. In most cases, separate property is not eligible for property division in Michigan divorces, but it may factor into the judge’s decision-making when rendering a property division settlement.

What is Considered Commingled Property?

Sometimes, even accidentally, separate property may become commingled property, which may render it marital property in the eyes of the law.

When separate property gets commingled and the ownership of the property gets confused, it may be considered marital property and subject to property division. If you are heading towards a divorce, make every attempt to make certain property explicitly separate. Contact our law firm for legal assistance.

How is Debt Handled in a Michigan Divorce?

Debt accrued during a marriage may be considered marital debt and thus subject to property division between the divorcing spouses. Separate debt accumulated by only one spouse either before or after the marriage in their name will typically be seen as separate property and remain their sole responsibility.

Can a Prenuptial Agreement Protect Your Assets?

Nuptial agreements, such as prenuptial or postnuptial agreements, can more clearly define what you and your spouse determine to be marital or separate property. This can streamline the property division process during divorce proceedings. Additionally, a prenuptial or postnuptial agreement can provide a certain level of asset protection to divorcing spouses.

Are Benefits Considered Marital Property?

In all Michigan divorce cases, retirement benefits are considered marital property. Retirement benefits are typically divided in one of two different ways. In the first method, known as the offset method, the benefits are not divided; rather, one spouse keeps the benefits while the other spouse recovers assets from the marriage that are equal to the benefits. This is a balance sheet approach where we are putting assets in each spouse’s name and trying to get an equal distribution.

The other method, the deferred division method, involves a domestic relations order to give a non-employee spouse an actual interest in their ex-spouses’ retirement benefits. So this would involve taking part of the retirement account and putting I the other spouse’s name.

Who Gets to Keep the House?

In a Michigan divorce, the house does not automatically go to whoever’s name is on the deed. Like all marital assets, it will be divided in a way that is deemed equitable and fair.

You and your spouse have a few legal options before your divorce case goes to court. You need to decide whether either of you wants to keep the house, or do you want to sell it and split the proceeds. So in a divorce there are typically three options for division of a house; husband can keep it and buy out his wife’s interest, or wife can keep it and buy out her husband’s interest, or as a third option they can sell it and split the proceeds from the sale of the house.

If you and your soon-to-be ex-spouse cannot agree on ownership of the house or whether to sell it, you may consider divorce mediation to help settle your differences.

Are Michigan Property Division Settlements Public Record?

Unlike a divorce judgment, a property settlement worked out between the two spouses may or may not be a matter of public record. The parties may put all the details in their judgment of divorce, and then it is in the public record. Or, they may have a separate settlement agreement that is kept private and separate from the divorce judgment.

A Michigan property settlement agreement has the option of being merged in with a divorce judgment. When the settlement agreement is merged into the judgment of divorce, it becomes part of the court order and is enforceable as an order of the family law court. If the settlement is not part of the divorce judgment, it will be considered a freestanding separate contract.

Contact Our Law Firm for a Free Consultation Today

Contact our law firm for guidance on property division and other family law matters. Our legal team prides itself on providing compassionate services to clients in need across the state of Michigan. Scheduling our free initial consultation today by calling us at 248-290-6675.