One of the first questions people have when discussing divorce is how the end of a marriage could affect their financial circumstances. People may know that Michigan uses an equitable distribution rule instead of a community property rule.
Essentially, state law establishes a standard prioritizing the fairness of the final property division decree rather than an even split. Judges consider factors including the health of the spouses, their earning potential and how long the marriage lasted when deciding the most appropriate way to divide marital property in a Michigan divorce. The extent of one spouse’s separate property can also influence the divorce. Separate property is typically not at risk of division unless the other spouse helped improve or maintain those assets.
What resources can one spouse protect as separate property in a Michigan divorce?
Assets owned before marriage
For many people, the property that they owned before marriage might be what they worry about protecting when they decide to divorce. People may have started small businesses or purchased a home long before they met their spouse and may not want to share that property when they divorce. Typically, assets owned before marriage can remain the separate property of one spouse unless there is evidence of commingling, such as proof that one spouse helped with the practical maintenance of the assets or covering the financial cost of preserving those resources.
Inheritances and gifts
Some property received during a marriage clearly only belongs to one spouse. They may have received a gift from their sibling or an inheritance from their grandparents. Such assets typically remain the separate property of the recipient spouse unless they commingle those resources with marital assets.
Assets protected in a prenuptial agreement
Spouses can essentially designate certain assets to be separate property before they ever even marry. Designating certain assets as separate property is one of the most common acts when drafting a prenuptial agreement. The assets protected by a marital agreement can potentially remain the separate property of the spouse with a pre-existing ownership interest in those resources.
The extent of one party’s separate property can potentially influence how the courts handle other aspects of property division in a Michigan divorce. Reviewing the marital estate carefully can help people establish an effective property division strategy as they prepare for divorce. Separate property can be vulnerable in some cases and can influence the division of marital property in other situations.