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How Property is Divided in Divorce

Property division is an inevitable aspect of getting a divorce. Depending on how much property has been accumulated during the marriage, in addition to the type of property in question, your divorce lawyer may have quite a bit of work to do – not only to determine what property belongs to which spouse, what property should be considered part of the marital estate, and how much the property in question is worth. Ultimately, family courts must approve of the property settlement. Learn more about how the courts classify and divide property in Michigan divorce cases.

What is Property?

For our purposes, when we discuss property, we mean everything that you own, as well as any assets and/or debts you may have. If you and your husband or wife make the decision to divorce, an assessment of your property will need to take place, and anything that you own is fair game. Items considered to be property in the family law context include, but are certainly not limited to, the following items:

  • House;
  • Cars;
  • Boats;
  • Furniture;
  • Bank accounts;
  • Retirement benefits (i.e., IRAs, 401(K)s, pensions, etc.);
  • Credit card debt;
  • Mortgage;
  • Student loans; and
  • Car loans

 

Determining Marital vs. Separate Property

The length of the marriage and the co-mingling of assets during the marriage are pivotal when considering the issue of whether property is marital or non-marital. Ordinarily, all assets acquired during the marriage by either party are marital.

In addition, assets owned by either party prior to the marriage which appreciated in value during the marriage as a result of the efforts of both parties will be considered marital in nature. Assets (or parts of assets) owned by one party prior to the marriage which may have been kept separate or segregated during the marriage may not be considered marital assets.

Factors Used in Dividing Marital Property

There is no fixed percentage or mathematical formula applied to the division of a marital estate upon divorce in Michigan. Courts are obligated to consider many factors in deciding how to allocate or divide a marital estate in the case of divorce. While the court is not required to consider every issue in every case, they must look at any issues which are relevant.

The factors most often considered are set forth in Michigan case law, and include:

  1. the length of the marriage;
  2. the contribution of each party to the marital estate;
  3. the needs of the parties;
  4. the needs of the children;
  5. the parties’ earning ability, age, and health;
  6. fault or past misconduct of the parties; and
  7. any other equitable factors the Court finds relevant.

The court is obligated to strive for a fair division of the assets of the marriage. This must take into account the appreciation of assets that may have been owned prior to the marriage but that increased in value during the marriage as a result of the efforts of the parties.

How Courts Divide Marital Property

In its most basic form, the division of a marital estate is a three-step inquiry, and the Courts will focus on these questions:

  1. What is the scope of the marital estate? The Court will examine and pool together all of the assets owned by the parties as a couple.
  2. What is the value of the entire collection of assets? This is an attempt to place a monetary value on each item in the collection of assets, which will enable the Court to make an equitable split of the property.
  3. How can the property be divided to provide both parties with a fair share?

These basic questions will be applied regardless of the size of the estate. However, even if these questions can be answered in their basic form, a number of subissues typically arise in any given case. For example, courts will often be called upon to determine how to categorize property that was owned by one party prior to the marriage and subsequently brought into the marriage property, or inheritance left to one individual during the marriage.



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