When you live a married life, you start to acquire things. You acquire what we call assets. Will these things become marital assets?
What are marital assets? In Michigan, what is considered to be a marital asset as couples divide up a divorce estate?
Click here to watch the video What Are Marital Assets in Michigan?
Maybe they came to you before the marriage. Or maybe you brought them into the marriage. Maybe they are things actually accumulated during the marriage but are owned by a corporation or some other entity. Just because you happen to have these things now or you happen to have control of it doesn’t necessarily mean they are marital assets for the purposes of divorce. It may be or it may not be.
It’s up to your lawyer to have this discussion with you. You and your lawyer can determine whether or not under the law that particular item or asset falls into the marital asset category.
Obviously, this is something for which there may be questions. A lot of people say well, I inherited something. Is that a marital asset? I brought it into the marriage but it is a family heirloom. It’s been in my family for years. Is that a marital asset?
What Are Marital Assets?
Simply put, marital property refers to the possessions a couple accumulates during the course of their marriage. Various assets, including a home, a car, certain shared bank accounts, heirlooms from the family, and more, may fall under this category. These assets can be shared between the two parties in a divorce while assets obtained prior to marriage are usually not.
Any asset or liability amassed throughout the marriage from the date of the wedding until the judgment of divorce is entered. The division of the marital estate is up to the parties.
In the course of a marriage, houses are frequently bought. The house would be divided in accordance with its status as marital property. Couples who are divorced occasionally decide to sell their house and divide the money. Or, to maintain an equitable property division, one spouse may keep the house while the other obtain other assets, such as money in joint bank accounts.
What Are Separate Assets in Marriage?
Any property possessed by either party previous to the marriage and certain property acquired during the marriage through gifts or inheritance is considered separate property. The party to whom the separate property originally belonged is typically awarded it. Property acquired separately may later be transferred to the marriage.
For instance, you might have had a luxury automobile before you were married. In most cases, you would keep ownership of the car throughout the property division. However, if you buy a luxury automobile with your spouse, it may be regarded as marital property.
Even if your parents left you the luxury car during your marriage because they passed away, it would probably still be regarded as separate property and you would still be the owner. In Michigan divorces, the source of the property is crucial, and even if you didn’t get it until after you were married, this source would have existed before your union.
If the separate property is combined or blended with marital property, it can be treated as marital property when it comes time to divide the assets.
Can Separate Assets Become Marital Assets?
From a legal standpoint, separate property may occasionally overlap with or change into the marital property over the course of a marriage. An illustration would be if the independent property was combined or “commingled” with the marital property or used for the family’s advantage.
A share of one spouse’s separate property may be awarded to the receiving spouse if they “contributed to the acquisition, improvement, or accumulation of the property.”
This exemption may take the form of a vacation home one spouse inherited and greatly increased in value with the assistance of the other spouse. It could also take the form of one partner taking on childcare and housework responsibilities so the other spouse can devote their entire attention to expanding a business they started before getting married.
Here are a few more examples of commingling:
After purchasing their new marital house, the couple discovers that it needs a lot of upkeep. For many of the renovations, the pair is dependent on the funds from one spouse’s savings account, which she created before the marriage. The house’s worth rises as a result of the improvements.
One of the partners already had a savings account before they got married. When she marries, she wishes to purchase a home with her spouse. She pays the down payment on the marital home with money from her personal savings account.
The wife sells the stocks she had previously bought to fund a small business venture she and her husband want to launch jointly.
It’s possible for separate property to unintentionally mix with marital property. In Wolcott v. Wolcott, unpublished judgment, COA Number 351918, the woman was given 10% of a family business as a present soon before the pair got married. She was employed by the business as well.
The wife got payments from the corporation related to her stock ownership that was transferred into a bank account that was solely in her name. The pair maintained separate bank accounts throughout the marriage. Following the couple’s 16-year marriage, the trial court ruled that the stock and the bank account belonged to the woman separately.
On March 11, 2021, however, the Michigan Court of Appeals ruled that the stock and bank account had been commingled and were marital assets because of two circumstances:
[ 1 ] The wife’s earnings from her job, which are normally considered a marital asset, were placed into the same account as her stock distributions; and
[ 2 ] Throughout the marriage, the wife used distributions from the company stock in addition to her other sources of income to pay for joint costs and household bills.
It is not just everything you have. It’s possible that a person may have some things that are not part of the divorce discussions. They’re not marital assets.
Maybe they came to you before the marriage. Or maybe you brought them into the marriage. Maybe they are things actually accumulated during the marriage but are owned by a corporation or some other entity.
How to Keep Your Personal Assets Separate From Marital Assets
If you know you already have or will inherit sizeable assets you wish to keep out of a divorce, you might benefit from signing a prenuptial agreement before getting married.
Prenuptial agreements offer the opportunity for parties to define what will happen to their assets in the event of their demise or divorce, designating specific item to each spouse. They also outline guidelines for handling domestic business. Because Michigan courts have recently changed how they interpret prenuptial agreements, their ability to protect assets during a divorce is no longer as unquestionably true as it formerly was.
You must maintain the distinction between your own property and the rest of your family’s cash and things. This can call for:
[ a ] Maintaining an inherited sum in a different bank account.
[ b ] Keeping your home and car under your sole name.
[ c ] Not using marital funds to make improvements or repairs to inherited property.
[ d ] Refusing your spouse’s help in maintaining the inherited property or managing the family business.
[ e ] Keep up-to-date property records to prove your personal asset qualifies as a distinct piece of property.
[ f ] Do not add your spouse’s name to your separate property’s certificate of title.
[ g ] Verify that the funds used to pay real estate taxes and the income from these properties are either credited to your personal account, drawn from sources in your name, or come from checking accounts in your name. To pay the income taxes on the earnings from these different assets, if at all possible, obtain the cash from the gifts or inherited property’s earnings.
If the wife had kept a second, separate account into which she had deposited her paychecks and from which she had paid the marital expenses and household bills, the Court of Appeals most likely would have determined that the stock and the bank account into which stock distributions were deposited were the wife’s separate assets in that particular case.
Even though the Wolcott decision was unpublished and hence not a precedent, it demonstrates that an asset must be maintained as fully different in order to sustain a party’s claim of independent ownership of an asset.
Just because you happen to have these things now or you happen to have control of it doesn’t necessarily mean they are marital assets for the purposes of divorce. It may be or it may not be.
It’s up to your lawyer to have this discussion with you. You and your lawyer can determine whether or not under the law that particular item or asset falls into the marital asset category.
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