women taking off her ring and wanting a divorce
Share on Facebook
Share on Twitter
Share on LinkedIn
By Royce Nunley

If you are considering a divorce, it is important to know how your property will be divided with your spouse. When you sit down with your divorce lawyer to discuss filing for divorce, it is vital for you to have a sense of what assets and liabilities belong to you alone, and which ones will be deemed marital property by the State of Michigan. It is also important for you to know the factors that will be taken into account, so that you can prepare yourself accordingly.

Michigan is an Equitable Distribution State 

In divorces, there are generally two ways that states treat marital property. Some states use a community property standard where the property distribution will try to get as close as possible to a 50/50 division. In contrast, equitable distribution states like Michigan look at what is the fairest division of marital property and liabilities under the circumstances on a case-by-case basis. By using a formula grounded in equity, the division may not end up as a pure 50/50 split.

How is Equitable Distribution determined?

The court will look at a number of different factors in arriving at the equitable distribution formula. First, it will consider the length of the marriage. This is vital if both spouses brought any property to the marriage. While in general such assets will be deemed separate property, in a long marriage, an argument can be made that such property was converted to marital assets.

A second factor is the amount each spouse contributed to the marital estate. This can be tricky, as a stay-at-home spouse can always make the argument that he or she sacrificed a career in order to support the other. This may also apply to any advanced college degrees or professional licenses earned during the course of the marriage.

This also dovetails with other factors like the life status, age, and health of the spouses, as well as each spouse’s earning capacity and financial circumstances. In any event, the court will determine the division in such a way that wouldn’t leave one spouse or the other destitute. These factors will be taken as necessary on a case-by-case basis.

One key factor can be the past relations and conduct of the spouse. If he or she did anything to dissipate marital assets, such as gambling or substance abuse addictions, this could reduce his or her share of marital property. Similarly, a history of spousal abuse can negatively impact one’s position when requesting an equitable distribution.

In any event, the distribution will have to be fair to each spouse in light of all circumstances. As you can see, sometimes making an exact dollar estimation can be difficult.

How is separate property treated?

The reality is that most people bring assets to a marriage. In addition, a spouse may receive an inheritance or gift during the marriage that was meant for them alone. Michigan recognizes this, which is why such assets are usually deemed separate property and not subject to an equitable distribution. However, if a spouse comingles his or her separate property with marital property, it may lose its separate property distinction. For example, if a wife puts money from an inheritance into a joint account with her spouse, then the funds will be deemed marital assets subject to equitable distribution.

Similarly, if the husband has an investment account, and either puts the spouse’s name on the account or accepts contributions from the spouse into the account, this account may be considered part of the equitable distribution. This contribution can also be seen with other assets as well, such as vehicles and real property.

Finally, the judge has the authority to use a portion of separate property to make the asset distribution more equitable. This can occur if one spouse has significant separate property and failure to do so would make the other spouse incapable of meeting his or her needs.

What happens to retirement assets?

These days, most people accumulate retirement assets from work or personal investment. These can be 401Ks, pensions, IRAs, and annuities. When someone gets divorced, these assets can become subject to the equitable distribution. The court will look into the length of time that the assets grew during the marriage, subtract any amounts that pre-dated the marriage, and then issue a Qualified Domestic Relations Order (“QDRO”). This QDRO permits a portion of the retirement assets to be transferred from one spouse to the other without triggering any taxes or penalties for early withdrawal.

How are businesses and real property treated?

Some assets are not so easily divided. Sure, cash and cash equivalents in accounts can simply be divided to the nearest dollar, and if there are two cars, each spouse can take one. But what happens if the marital estate includes businesses or real property with values that are not easily determined, and which cannot simply be split? In this case, one or both spouses can pay for professional appraisers to determine the current fair market value. The court will then determine how much of the value will be distributed to each spouse. This can lead to one spouse buying out the other for an amount around half of the appraised value.

What happens to liabilities?

Liabilities are also subject to an equitable distribution. In general, any debts incurred during the marriage are divided equally. However, if the court determines that one spouse incurred the debt without the other’s consent, it could make that spouse solely responsible. This often happens with gambling debts or if a spouse gets sued for professional misconduct. The court could also make a spouse pay a larger share if there is a significant income disparity or was deemed at fault for ending the marriage.

With respect to mortgages, car loans, and other debts tied to specific assets, those will normally become the sole responsibility of the party receiving such assets in the equitable distribution of marital assets. However, the court can order the non-owner spouse to continue to be responsible for paying a portion of such debt. In addition, even if you no longer own the asset, you can still be held liable by the creditor as it is not bound by a marital decree.

Call us today if you need assistance with your divorce

Handling the equitable distribution of your marital property is a major part of any divorce. The experienced divorce attorneys at The Nunley Law Group can assist you with handling this so that you get a fair and equitable share of your marital estate in your divorce. 

About the Author
Royce Nunley practices in the areas of Family Law, Criminal Law, Social Security, and Personal Injury law. Royce graduated Cum Laude from Wayne State University with a bachelor’s degree in Spanish. He continued his education at Wayne Law, where he received his Juris Doctorate Cum Laude. Named to Superlawyer’s “rising stars” in 2019, 2020, 2021, and 2022 for his work in Family Law.