Dividing Assets and Debt in Divorce

In the state of Michigan, there is an average of 28,000 divorces each year, divorces are also declining each year but so are marriages. With so many divorces every year it’s important to be informed on assets, debt, and how things are divided during a divorce. When a couple is married they usually share a lot of things like property, money, and other assets. When a divorce occurs the question of who gets what may come up. It’s up to the court to finalize how assets will be divided. Here is everything you need to know about assets in a divorce in The State of Michigan. 

How does the court decide how to divide property?

There are many approaches to property division utilized by various states. In Michigan, the preferred approach is known as “equitable division of marital property”. Under this approach, any property which was owned by either spouse before the marriage is their own “separate property”. Any property which was acquired during the marriage is divided up in a fair and generally equal matter. 

That being said, what is fair will not always be “equal”, and the family court will seek fairness above all else. However, under certain circumstances, the court may dip into one party’s separate property to give to the other in order to achieve “fairness and equity”. They are also likely to treat what would otherwise be separate property as marital property if the other spouse was somehow instrumental in acquiring or developing that property. The court will do anything in its power to make sure all assets are equally divided and everyone gets what they deserve. 

Marital Debt In A Divorce

The courts handle debt similarly to other assets and property. If everything goes perfectly and no other issues arise, marital debt in a Michigan divorce will be split 50/50 between the two parties. It doesn’t matter whose name the debt is in, in most cases that debt will be divided between both spouses. There are many options of paying off debt and splitting these things, talking to the other party and your lawyer can help you out by creating a plan that will work for everyone involved. At the end of the day, debt has to be handled like assets, and you have to retire the debt equally and equitably just like anything else.

In the real world of divorce, it is extremely unlikely that someone will receive 100% of the marital assets and that the other person will walk away with zero assets. Despite the fact that MI is a no-fault divorce state, the truth is that fault can be relevant to some property, alimony and other issues. The court may not be equal about it, it may be something along the lines of a 60-40 split, but you don’t see 90-10 split in these scenarios from Michigan courts. Lawyers who have experience will know about the rules of the splitting of marital assets and will tell you that you will get an equitable distribution that is fair. 

What is Separate Property

While this usually consists of any real estate, personal items, cars, or cash you owned before you were married; it is important to be aware of other things which are considered separate property. For example, if you receive a personal gift from someone during your marriage, that would still be considered separate property. If you receive court awarded damages for pain and suffering, this is also considered separate property. Inheritance and personal gifts to one of the spouses are separate property, even if they are received during the marriage.

The court might still take your separate property and give it to your former spouse for a couple of reasons. This might happen if the court determines that, after dividing the marital property, the other spouse is still in need of more. Another reason that might occur is if your spouse helped in the acquisition or development of an asset. For example, if you attended college or grad school while married and your spouse helped pay for your tuition. In any case, where the effort of one spouse or marital funds is used to improve the value of the other spouse’s property, the court will generally either reimburse the other spouse for the value added or add that amount to the “pot” of marital property. 

What is Marital Property?

In general, marital property is any property that was acquired during the marriage. There are, however certain types of assets that the court deals with in a very specific manner. It is important to know about these in advance of a divorce case.

  • Pensions: Only the part of a pension that was earned while married is marital property. 
  • Professional Licenses and Degrees: These are also considered marital property if acquired during the marriage. However, the court will not actually take a degree/license and give it to the other spouse. Instead, the court will add the equivalent value of the certification to the “pot” of marital property and then divide it accordingly. 
  • Stock Options: If they are earned during the marriage they are marital property, even if they can’t be exercised until after the divorce. 
  • Employment Bonus: If it is earned during the marriage, it is marital property. However, if the bonus depends on a condition that does not occur until after the marriage, it is not considered “earned” during the marriage.
  • Workers’ Compensation Benefits: Only benefits for wages lost during the marriage. Also, if the injury occurred before the marriage, and the benefit for the lost wages is received during the marriage, then that benefit is also marital property.

What is High Asset Divorce? 

A high asset divorce in The State of Michigan is when there is $1 million or more in liquid assets and there is a large amount of property and other assets. There is a huge difference between the complexity of a divorce case involving assets and a case with no assets. When there are assets involved the best possible choice is to try to work with the other party to come to some kind of agreement so that the process can go much smoother. In reality, this is very difficult to do especially with high assets, this is why you need an experienced lawyer. 

How Do I Protect My Business In A Michigan Divorce?

During a divorce when dividing assets like personal and marital property, it’s a pretty easy process. Married couples usually share their house and other property. They also acquire property during the course of the marriage. For this reason, the court must determine what property belongs to whom, and how shared property should be divided. Like Spousal support, one of the objectives of property division is to return the other spouse to the position they were in before or during the marriage. The court will also try to give each spouse all of the property they have “equitable title” to. A quick tip to remember when you are going through a divorce, division of property cannot be modified after the case is finished. What’s done is done, the court doesn’t want to drag out the divorce for time and cost sake.

Who Gets the House? 

That depends on the circumstances. If there are no minor children involved in the divorce, then the marital home will be divided on the same basis as to all the other marital property. That being said, the court will show some preference for keeping the entire house in the possession of at least one of the spouses if it is possible to do so fairly. Typically if there are few other assets other than the house, then the house will likely be sold and the proceeds will be divided accordingly between the spouses. 

The other option is if the spouse who does get the house has enough personal wealth, or if there is sufficient other property, then the recipient spouse will have to “buy out” the non-recipients share of the total value of the house. If one spouse is the primary caregiver and has been given possession of the house, then that spouse is more likely to receive the marital home to ensure the continuity of the environment for their children and minimize the psychological harm that divorces often cause.

Will I have to pay tax? 

The quick answer, no you won’t. Division of property in a divorce is not a taxable event. Even though you are receiving money and property, this does not count as income for tax purposes. Similarly, anything you pay to your former spouse is not tax-deductible. 

What is Mixed Property?

Aside from the material needs of the other spouse and said spouse’s assistance in acquiring a piece of property, there are at least two other ways that property that would otherwise be separate can become marital property. One way this can happen is if the property is “mixed” with either marital property or with the former spouse’s separate property to such a degree that it cannot be separated. The other way is if both spouses explicitly act as if the once separate property is now shared property. An example of this is placing the property in the name of both spouses.

Conclusion 

Dividing assets and debt is a case by case situation, always talk to your lawyer first before doing anything when you get a divorce. The court will be making the final decisions when it comes to dividing assets, they will be as equal as possible. Having the right attorney will make a huge difference when it comes to getting the things you deserve. Remember to list off all your assets and marital debts before your divorce. This will help you in the long run, the court will look at everything that you own and will divide it equally.

If you need more information on High Asset Divorce or Marital Property or if you have any questions regarding divorce in The State of Michigan contact Goldman and Associates Law Firm. At Goldman and Associates, our attorneys are experts in family law and they will thoroughly examine all aspects of your divorce. With the best lawyers in Michigan, Goldman and Associates takes each and every case very seriously and gives you the outcome you desire.

For more information on high asset divorce in the State of Michigan watch the video below and check out the Goldman and Associates YouTube channel for more videos on everything relating to law in Michigan. Make sure to give our attorneys a call if you have any questions about domestic violence in Michigan. 

Click the link to schedule a free case evaluation:https://app.acuityscheduling.com/schedule.php?owner=17105687&appointmentType=18529428 

For more information visit:https://www.akivagoldman.com/michigan-legal-blog/michigan-divorce-lawyer/

You can give us a call for a FREE phone consultation at (248) 588-3333

https://www.youtube.com/watch?v=w-yxbYAu6Z0 

Resources 

http://akivagoldman.com/ 

https://www.youtube.com/watch?v=ZMQwrk61XHI