Typically, any property that is obtained during marriage is considered “marital property” to be divided between the parties. In other words, it does not necessarily matter who “earned” what during marriage. Income and property is considered the property of both parties to a marriage. Even if one spouse spends their personal earnings to purchase something that is exclusively for their use, Michigan Courts consider this to be marital property and employ “fair and equitable” property division, meaning that they won’t necessarily divide marital property equally, but really “equitably” meaning the courts strive to accomplish fairness over a particular formula. M.C.L.A. 552.19.
However, property acquired before the marriage is considered separate property. For instance, if the husband owned a home before getting married, the home would remain his property upon divorce. If, however, the husband owned a home before marriage but performed upgrades to the property during the marriage, the wife would be entitled to her share of the added value to the home as a result of the upgrades made during the marriage.
Additionally, the parties’ debt is divided upon divorce as well as the assets acquired during marriage. Generally, the same rule applies – debt incurred prior to marriage will remain with the spouse who incurred it. However, marital debt acquired during the parties’ marriage is either divided equally or divided according to how the parties’ assets are divided. In other words, a spouse who is awarded more marital assets may also be awarded more debt as well to offset the fact that the other spouse did not get as much property and should not, in fairness, be responsible for as much debt.
Parties are free to enter into agreements to divide their property amongst themselves as they please. If at all possible, I encourage my clients to come up with a property settlement agreement to avoid having to litigate property division as it is always unclear how judges will rule. However, it is often the case that the stress and intense emotions arising out of divorce will preclude spouses from being able to settle their affairs amicably.
Lastly, a common method of determining property division is Alternative Dispute Resolution (ADR), which typically means either mediation or arbitration. Some jurisdictions (courts) will automatically order parties to mediation when property division or other things are in dispute. Mediation means that the parties are ordered to negotiate with each other with the assistance of a mediator, who is not authorized to make a decision without the consent of the parties but may or may not have authority to order the parties to do a variety of other things in an effort to get them to agree to a resolution. Sometimes parties may attend an arbitration which, unlike a mediator, is authorized to make binding decisions on his or her own. Either option is presented as an alternative to a judicially-created solution, which may be unsatisfactory to one or both parties.
Regardless, if you are facing divorce and concerned about property settlement or any other aspect of divorce, I urge you to contact me to discuss your options. Working out a settlement and protecting your future can sometimes be more difficult than it appears.