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Property Division in Divorce

legal4 (49K)      Property division in Michigan is based on an equitable division of marital assets. Property will generally fall into one of two categories - "separate property" and the "marital estate." In Michigan, all property that a married couple jointly accumulates during their marriage is included in the "marital estate" and subject to property division without regard as to which spouse acquired the property. Property and earnings accumulated during marriage will be divided equitably (fairly), but not necessarily equally. Marital assets are normally valued at the time of trial or the date of entry of the divorce judgment. Consequently all increases in value during the divorce process are considered marital property. Although Michigan is a no-fault state in terms of ground for a divorce, fault is one of the factors considered in a property division. Additionally, hiding assets in a divorce is illegal in Michigan. If a party discover that assets were concealed or hidden after the Judgment is entered, the party the concealing spouse can lose the entire asset.

     Separate property includes the property each spouse had before the marriage or acquired during the marriage by gift or inheritance, including personal injury damage awards. Separate property is generally not subject to division in a divorce. To ascertain that an asset is separate property, it must have remained in the exclusive ownership and control of one spouse. Possessions can lose their status as separate if they are commingled with joint property. The court may include that property among the other property divided upon divorce. For example, if you put separate money into a joint bank account with deposits and withdrawals, that money might become property of the marriage, and subject to division.

     Division of property does not necessarily mean a physical division. The court may grant each spouse a percentage of the total value of the property. Each spouse will get personal property, assets, and debts whose worth adds up to his or her percentage. Most attorneys and courts will attempt to avoid litigating the division of household items, because it usually will cost more in legal fees to fight over household goods than it would to purchase new ones.

Property Division in Divorce

     Types of property and their treatment in property division:
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  • Social Security Disability. If the benefit is received for injuries sustained during the marriage, social security disability benefits are considered part of the marital estate and subject to division.
  • Social Security Benefits. Because the benefit has no present value it is not subject to division. However, the monthly incomes received can be considered for determining child support and alimony.
  • Pension Benefits.The portion of the pension benefit accumulated during the marriage is part of the marital estate and is divided as part of the property division. It does not matter whether the pensions are vested or unvested.
  • Retirement Accounts. The portion of any retirement account accumulated or acquired during the marriage is part of the marital estate and subject to division as part of the property settlement.
  • Personal Injury Awards. Personal injury awards may be included as property of the marital estate and subject to division.
  • Stock Options. Stock options (even if they can only be exercised in the futerare part of the marital estate if they were accumulated during the marriage.
  • Workers Compensation benefits. If the benefit is received for injuries sustained during the marriage, workers compensation benefits are considered part of the marital estate and subject to division.

Property Division in Divorce

  • Unemployment Benefits. Unemployment benefits are not subject to property division but are considered in determining child support and alimony.
  • The Marital Home. As with other assets a marital home acquired during the marriage is subject to division. This asset, however, poses problems not found with distributing other assets. Complications include which party will be permitted to live in the home after the divorce and how the other party will be compensated.
  • Debts. Debts are negative assets and are subject to division in the property settlement. All debts incurred during the marriage are considered joint obligations regardless of who signed for the debt. If a debt was incurred for the separate purposes of one spouse and not for the benefit of the household without the consent of the other spouse, it may be considered a party's separate debt.

     The equitable distribution of property can become one of the most contentious issues in a divorce. Problems can arise regarding the emotional ties to certain items of property and valuation of the assets. Valuation of assets can be a difficult process especially when determining the net present value of pensions received in the future. Often appraisals of real estate and other items such as collectibles are required. Tax issues may also be a major factor in dividing assets.

     It is our policy to attempt to negotiate a fair settlement between the parties without the necessity of a trial. The costs associated with a trial which can include substantial discovery (such as depositions) the use of expert witnesses and attorney fees can make litigation a very expensive process. If we are unable to obtain an agreement through negotiation we will use the services of a court appointed mediator to assist in resolving any outstanding property issues between the parties.

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