Property Division in Divorce

In a divorce or separation action, all assets owned, and debts owed by the couple must be divided equitably. This may occur through agreement of the parties or by a court order. Typical assets and debts that need to be divided include, but are not limited to, a house, vehicles, household property, businesses, pensions, retirement accounts, investments, stocks, credit card debt, personal loans, life insurance policies, medical bills, and student loans.

Division of property in a divorce also gives rise to additional considerations such as the ability to refinance, tax consequences, title transfers, insurance matters, business document changes, etc.

How Will I Know What Property and Debts Exist?

One of the first steps in a divorce case is the financial disclosure process. Both parties will gather all financial information that would affect the case and each party’s interests and disclose that information and corresponding documents to the other party. Each party is required to complete a Domestic Relations Verified Financial Information Form, which outlines income information, debts, assets, and claims to separate property.

Separate Property vs. Marital Property

Inherited property or gifts may be deemed either marital or separate property, depending on a few factors. Generally, property owned by one party before the marriage, and any premarital value associated, is considered separate property. However, if one spouse can prove any premarital property was commingled or essentially gifted to the marriage, that property may be deemed marital. If a couple has a Prenuptial Agreement, that document may outline which assets and debts are considered separate, marital, or a combination of both. Marital property is generally anything spouses acquire during the marriage or sometimes an increase in value of an asset during a marriage to an asset owned by one party before the marriage. There are nuances to both separate and marital classifications of property.

The general rule is that marital property is divisible in divorce and separate property is not. However, there are a couple of exceptions to the court’s general inability to divide separate property. These exceptions include contribution to the value of the separate property and the determination of whether there is adequate marital property to ensure both parties have an equitable outcome in property division. It is important to discuss these matters with an experienced family law attorney to make sure the final division of property is equitable as to both separate and marital property.

Experts

Often before property can be equitably divided in divorce, it is necessary to retain an expert to value the property. Residential appraisers, business valuation experts, accountants, and pension appraisal experts are some of the most common individuals consulted to assist in property division.

What Happens if the Parties Agree on Property Division?

Amicably dividing the marital estate is the goal of every case. If the parties agree on any or all of the property division, they should reduce those agreements to writing in a Settlement Agreement. That Settlement Agreement is a binding contract between the parties once written and signed by the parties. A Settlement Agreement will often become incorporated into the final Judgment of Divorce as an enforceable order so long as the Court finds the parties entered the contract freely and voluntarily and that both parties understand the agreements. A Settlement Agreement can typically be executed at any point in a case, including before, during, or after mediation and before a contested evidentiary hearing before a judge.

What If the Parties Disagree on Property Division?

Whichever property or debts parties to a divorce action cannot agree upon will be submitted to a judge. The judge will determine the equitable division of the marital estate and enter orders accordingly after an evidentiary hearing. It is important to note that while the court is required to equitably divide marital assets and debts, they are not required to equally divide the estate.

Contact Our Michigan Family Law Attorneys Today

Contact McKinney Vos today for a free consultation with one of our Michigan family law attorneys to discuss the specific circumstances of your case and questions regarding the division of the marital estate.