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Common questions about dividing assets in a divorce

Divorce is one of the most traumatic events to happen in a person’s life. We know how emotional and challenging this can be on you personally and financially.

Our clients frequently ask questions about how the court will divide their property and retirement benefits. Also, we often get asked about spousal support. Let’s look at these three areas and how to protect your best interests.

Property

In Michigan, division of marital property follows the rule of equitable distribution governed by case law and court rules. Although there is no requirement that property awards be precisely equal to each party, there is an assumption that the division of marital property (as opposed to separate property) will be roughly congruent.

If a court departs from this “presumption of congruence,” it must consider certain factors in dividing the marital property. Case law establishes a list of factors to be considered in dividing marital property. The most frequently cited are:

  1. Length of the marriage
  2. Needs of the parties
  3. Needs of the children
  4. Earning power of the parties
  5. Source of the property
  6. Contributions toward property acquisitions
  7. Cause of the divorce, including fault in the breakdown of the marriage. Fault, in particular, has a limited role; although it is still a consideration in property division, it may not be used punitively for an inequitable result.

Separate property claims typically involve assets that a party owned before the marriage, gifts or inheritances, assets received after separation or filing or assets or appreciation traceable to those items. Separate property is awarded to its owner unless the nonowner spouse can meet one of two statutory tests:

  1. He or she contributed to its acquisition, improvement or accumulation MCL 552.401, or that,
  2. Absent a division of the separate property, the marital estate would be insufficient for his or her “suitable support” MCL 552.23.

Debts that one party acquired before the marriage are normally considered separate debts. Debts that were acquired during the marriage are normally considered marital debts. It doesn’t matter who made the purchase or accumulated the debt. However, as always, there are some exceptions to this rule. For instance, gambling debts, money spent on extramarital affairs and money spent for restitution in a criminal case are usually not considered a marital debt.

Although a settlement may require one or the other party to pay a given debt, he or she is still potentially liable to the third-party creditor for that debt if the other party does not pay it. Therefore, it is important to hire an experienced attorney to implement the appropriate security and enforcement devices.

Retirement Benefits

Michigan law requires every judgment of divorce (or separate maintenance) to determine and divide the rights, including contingent rights, of the parties to:

  1. Any vested pension, annuity, or retirement benefits
  2. Any accumulated contributions in any pension, annuity, or retirement system; and
  3. Any unvested pension, annuity, or retirement benefits. MCL 552.101(3).

In Michigan, division of marital property follows the rule of equitable distribution, meaning fairly, not equal. Although there is no requirement that property awards be precisely equal to each party, there is an assumption that the division of marital property (as opposed to separate property) will be roughly congruent.

If a court departs from this “presumption of congruence,” it must consider certain factors in dividing the marital property.

Retirement benefits included in the marital estate may be divided by one of two ways:

  1. The offset method, which does not actually divide the retirement benefits, but gives the nonemployee spouse other marital assets equivalent to his/her interest in the retirement benefits or
  2. The deferred division method, which gives the nonemployee spouse an actual interest in the employee spouse’s retirement benefits.

It is important to consult with an experienced attorney who understands the factors involved in allocating the appropriate percentage of retirement benefits and determining the best method of distribution.

Spousal Support

Many people have the misconception that spousal support is a thing of the past in Michigan. However, this particular issue is raised in almost every divorce.

When divorce terminates a long-term marriage, spousal support is used to support a former spouse who is unable to support himself or herself at a financial standard of living comparable to that during the marriage.

Spousal support must be decided on a case by case basis. However, caselaw establishes 14 factors in determining whether spousal support should be awarded and the amount of such an award:

  1. Parties’ past relations and conduct
  2. Length of the marriage
  3. Parties’ ability to work
  4. Source and amount of property awarded to the parties
  5. Parties’ age
  6. Ability to pay spousal support
  7. Parties’ present situation
  8. Parties’ need
  9. Parties’ health
  10. Prior standard of living of the parties
  11. Parties contributions to the joint estate
  12. Party’s fault in causing the divorce
  13. Cohabitation affects a party’s financial status
  14. General principles of equity.

Spousal support can fall into two broad categories – modifiable or nonmodifiable. The statutory right to modify spousal support is set forth in MCL 552.28.

If you want to modify an existing spousal support award, there needs to be a change in circumstances since entry of the last order. The party moving for modification of spousal support has the burden of showing sufficiently changed circumstances to warrant modification.

A typical change in circumstances is a change in income. However, a former spouse’s continued cohabitation with a boyfriend/girlfriend has been held to not be a sufficiently changed circumstances to warrant modification. See Crouse v. Crouse, 140 Mich App 234 (1985).

Careful considerations should be considered when evaluating a non-modifiable verse a modifiable award of spousal support and consulting with an experienced attorney who knows and understands the law should always be a must!

Keep in mind that spousal support is only one part of the economic puzzle and should not be isolated from other aspects of the divorce settlement, including property division, child support, when there are minor children and numerous other factors.

Team up with our accomplished and distinguished attorneys

The lawyers at Urbani & Marshall, P.C. strive to do what is legally best for each client. To that end, we take our role as attorneys and counsellors very seriously. We discuss all of your legal options to help you fully participate and make informed decisions about your case. Sometimes that means negotiation and settlement; other times, that means trial.

No matter what path we take, we are aggressive advocates. To arrange a no-pressure free consultation, call us at (586) 649-7712.

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While this website provides general information, it does not constitute legal advice. The best way to get guidance on your specific legal issue is to contact a lawyer. To schedule a meeting with an attorney, please call or complete the intake form below.

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