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Equitable distribution: property division in a divorce

On Behalf of | Jul 12, 2022 | Firm News

If you’re considering divorce, or if you’ve already decided it’s necessary, you’ll likely have a lot of questions about what will happen. Things like custody, child support and alimony are issues that will come up in most divorces.

Property division will come up as well, so it’s helpful to have a basic understanding of how a court may deal with your assets.  It’s important to note, however, that each case is different and the information below is to provide a general understanding of some property issues.  Because the facts of your marriage are as unique as you are, it is important to schedule a free consultation if you have questions about your particular assets.

Separate property

Once a divorce proceeding is underway, one of the first things to do is classify all of the assets and liabilities owned by you and your spouse. One classification is separate property – this is any asset owned entirely by one spouse. Most of the time, separate property will remain with the spouse who owns it once the divorce is final, though there are caveats to this.

Separate property refers to property owned by one spouse prior to the marriage, but in most cases, it must be kept separate throughout the marriage. One example of this is a retirement account earned by one spouse prior to the marriage.   If it remains completely passive during the marriage and that spouse does not actively contribute to it, it will likely be considered separate property.

Less commonly, specific gifts or inheritances, which are acquired during the marriage, and directed only toward one spouse, may also be classified as separate property.

Marital property

To the contrary, all assets, liabilities and income that the spouses acquired during the marriage are classified as marital property. All marital property is owned by both spouses despite whose name is tied to the asset. Michigan is an equitable distribution state – this means that the court will seek to distribute the property in a manner that it deems fair.

To determine what is fair, the court will consider many factors, including the length of the marriage, the financial needs of the spouses, their incomes and so on. While equitable does not necessarily mean equal, oftentimes in Michigan the starting point in Michigan for the division of marital assets is 50/50.   It is important to note that, if a couple can work together, they can bypass the court’s judgment and determine for themselves how their property is divided, through mediation or a Collaborative Divorce. This puts them in control of the process and increases the likelihood that they’ll be satisfied with the outcome.