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Michigan Property Division
Property Distribution Laws in Michigan

In Michigan the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the Circuit Court within the Judgment of Divorce.

Michigan is an equitable distribution state. When the parties are unable to reach a settlement, the Circuit Court may give a party all or a portion of the property, either real or personal, owned by his or her spouse if it appears equitable.

Since Michigan is an equitable distribution state, courts divide all marital property in an equitable fashion according to the court unless the spouses themselves agree otherwise. Equitable means what is fair, not necessarily equal.

Michigan is an "all property" state, and the appreciation of separate property is marital.

Factors in Equitable Distribution

Since Michigan is an all property state, separate propertyis eligible for distribution in a divorce action for separation.

According to Michigan Compiled Laws - Sections: 552.19, 552.101 and 552.401, if it appears from the evidence in the case that the party contributed to the acquisition, improvement, or accumulation of the property, that property may be awarded to the party. The decree, upon becoming final, shall have the same force and effect as a quitclaim deed of the real estate, if any, or a bill of sale of the personal property, if any, given by the partys spouse to the party.

In dividing property, the court considers:

  • the duration of the marriage;
  • the contribution of the parties to the marital estate;
  • the age of the parties;
  • the lifestyle and status of the parties;
  • the necessities and circumstances of the parties;
  • the past relations and conduct of the parties; and
  • the general principles of equity.

Marital Property v. Separate Property

In dividing marital property, the court distinguishes between marital and separate assets. When an asset is the separate property of one spouse, an increase in its value that occurred during the marriage is still marital property if the increase is due to the active involvement of one of the spouses, rather than simply passive appreciation. If the spouses cohabited before marriage, assets accumulated during that time are not marital property.

The court values marital assets at the time of trial or the date of entry of the divorce judgment. Thus all increases are considered marital property until the marriage ends. But property received after a divorce may be considered marital property if the property was obtained by efforts that took place during the marriage.

These assets are generally not considered marital: assets accumulated while cohabiting before marriage; an inheritance kept separate from marital property; increases in the value of a separate asset by passive appreciation (e.g., interest). Despite these general rules, however, courts distribute separate property if the marital property to be divided is insufficient.

The court takes punitive action when one spouse tries to hide assets from the other in contempt of court.

Fairness is the overriding concern, and when any of the factors are relevant to the value of the property or the needs of the parties, the court makes specific findings of fact.

Here is how Michigan views the following types of property:

  • Worker's Compensation and Social Security Disability are considered part of the marital estate if received for injuries sustained during the marriage.
  • Social Security benefits are not a marital asset, but may be considered when determining child support and spousal support.
  • Stock Plans and Stock Options are marital assets if they are vested, as are pensions. Stock options not yet vested or matured are treated differently.
  • Professional Degrees or Licenses may be marital when the degree is earned through a family effort. The contributing spouse has a claim for compensation for sacrifices, efforts and contributions, but the claim is not for a share in the lifetime investment value of the degree.
  • Courts consider the tax consequences of stock options and the value of accumulated vacation and leave days.
  • The party requesting consideration of taxes must present evidence of what the taxes would be.
  • The court may award either party the right to claim children of the marriage as a dependency exemption, but this is considered as part of the child support calculation, not the property settlement.

Valuing and Dividing Property

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally, it distributes the marital assets between the two parties in an equitable fashion.

The Marital Home

In Michigan, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and buy out the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In Michigan vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.

Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In Michigan if spouses share in each others retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.

Retirement Assets and Pensions benefits are not part of the marital estate unless the parties so agree. Each distinct component of a pension plan must be specifically awarded in the divorce judgment. The right of survivorship in a pension plan is given to the divorced spouse unless it is specifically included as part of the pension award in the judgment of divorce. Generally, only benefits earned during the marriage will be awarded in a divorce, unless they contributed to the acquisition of the benefits or the award to the claimant spouse from the marital estate is insufficient to maintain them.

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