In any divorce action that goes to trial, the court must divide marital property between the parties. To do so, it must first determine what property is marital and what property is separate. Reeves v Reeves, 226 Mich App 490 (1997). This is defined by statute under Michigan law, and interpreted by the courts. Generally, marital property is property that is acquired or earned during the marriage, while separate property is obtained or earned before the marriage. MCL 552.19 However, an inheritance received during the marriage but kept separate, may also be considered separate property. Dart v Dart, 460 Mich 573. Money received by one spouse in a personal injury lawsuit meant to compensate for pain and suffering, as opposed to lost wages, is also considered separate property. Washington v Washington, 283 Mich App 667 (2009).
Unfortunately the division between "separate" or "marital" can be anything but clear. And even separate assets may be characterized as marital property by the court if they are commingled with marital assets and “treated by the parties as marital property.” Pickering v Pickering, 268 Mich App 1 (2005). The mere fact that property, such as a home, is held jointly or individually does not necessarily determine whether the property is classified as separate or marital. See Korth v Korth, 256 Mich App 286 (2005). The court looks at all the relevant facts before categorizing the property as "separate" or "marital."
Once a court has determined what property is marital, this is what is called the "marital estate," which the court then must fairly divide between the parties. See Byington v Byington, 224 Mich app 103 (1997). The general rule is that, when the marital estate is divided “each party takes away from the marriage that party's own separate estate (property) with no invasion by the other party.” Reeves, 226 Mich App at 494.
There are two statutory exceptions to this general rule. One exception is when the court finds that the property awarded to the other party is insufficient for their "suitable support and maintenance." MCL 552.23. Michigan courts interpret this to mean that invasion of separate assets is allowed when one party demonstrates additional need. The other exception to this general rule is when the other spouse "contributed to the acquisition, improvement, or accumulation of the (separate) property." MCL 552.401. When one spouse significantly aids in the acquisition or growth of the other spouse's separate asset, a court may consider that contribution as having a distinct value deserving of compensation. In some cases, it is enough if a spouse took care of the cooking, cleaning, and child-rearing to enable the other spouse to develop and grow, for example, a business
The law of separate property is a complex and changing area of law that requires the assistance of an experienced professional to ensure a fair result. If you have questions about separate property in Michigan, call us to schedule a free telephone consultation.