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How Property Is Divided in a Michigan Divorce

When the decision has been made to divorce or separate, one of the biggest questions is “Who gets what?”

Many people think that property division in Michigan is a simple 50/50 split, but that is not always how it works. Under equitable distribution standards, marital property is divided fairly, but not necessarily equally.

If you want to know how property is divided in a Michigan divorce, here is the process. 

What Is Equitable Distribution?

In some states, courts divide marital property right down the middle. That is not the case in Michigan. There is no 50/50 split. Instead, the courts look at what is fair based on the specific circumstances of the marriage and divorce.

Sometimes, that means one spouse may receive a larger share of certain assets. This depends on factors like:

  • Length of the marriage
  • Income and earning ability
  • Contributions to the marriage
  • Age and health of each spouse
  • Financial needs moving forward
  • Fault or misconduct in limited situations

Since divorce is different, property division can vary from one case to another.

What Counts as Marital Property?

Marital property includes assets and debts acquired during the marriage. This can include:

  • The family home
  • Retirement accounts
  • Vehicles
  • Joint bank accounts
  • Investments
  • Credit card debt
  • Furniture and household items
  • Business interests acquired during marriage

Even if only one spouse’s name is on an account or title, the property may still be considered marital property. This is true if it was acquired during the marriage. That can come as a shock to most people.

For example, one spouse may believe a retirement account belongs to them because it is tied to their employment. However, if contributions were made during the marriage, a portion of that account could be subject to division.

What Happens to Separate Property?

Not everything is considered marital property. Spouses may have their own separate property. This can include:

  • Assets owned before marriage
  • Certain inheritances
  • Gifts received individually
  • Some personal injury awards

Unfortunately, this is where things get messy. Sometimes, separate property can become commingled with marital assets.

For example, if one spouse inherits money and deposits it into a shared account used for family expenses, that inheritance may lose some of its separate property protection.

In that case, it is now considered marital property, or at least a portion of it. 

Debt Division Also Occurs

Divorce is not just about dividing assets. Debts also have to be addressed. And marital debts can be divided along with assets. This could include:

  • Credit card balances
  • Personal loans
  • Medical debt
  • Mortgages
  • Auto loans
  • Tax obligations

Even if one spouse created the debt, the courts will examine whether the debt benefited the marriage or household.

Unfortunately, these debt disputes become just as contentious as arguments over property.

There Are Other Factors 

Property division is more than homes and credit cards. People are shocked to learn that retirement accounts may be divided during divorce.

401(k)s, pensions, IRAs, and other retirement benefits accumulated during the marriage are considered marital property.

In many cases, a special court order called a Qualified Domestic Relations Order (QDRO) is used to divide certain retirement accounts without triggering early withdrawal penalties.

Also, a portion of the couple’s business may be up for division. If one or both spouses own a business, property division becomes more complex. The court may need to determine:

  • Business valuation
  • Ownership interests
  • Future earning potential
  • Whether the business is marital or separate property

These are all situations where you will need the help of an experienced Oakland County divorce lawyer.

Hands holding wedding rings with paper cutouts of a man, woman, house, and keys on a black surface.

Can Spouses Reach Their Own Agreement?

Yes, and many couples work together to reach an amicable resolution. The courts encourage settlement agreements. This gives couples more control over the outcome. Plus, it takes leaving major financial decisions out of the hands of a judge.

Along with that, negotiated settlements can also reduce stress, legal expenses, and courtroom conflict.

Protect Yourself with Help from an Experienced Divorce Lawyer

Property division in a Michigan divorce is not as easy as splitting everything in half. The courts will look at marital assets, separate property disputes, retirement accounts, and debt allocation. You want an experienced Michigan divorce attorney on your side. 

At Law Office of Melissa M. Pearce, PLC, we can help protect your financial interests, explain your options, and work toward a fair resolution. Reach out today to schedule a consultation.