In a Michigan divorce, the process of equitable distribution is used to divide property in a fair though not always strictly equal manner. State law distinguishes between two types of property. Marital property includes anything acquired by either spouse during the marriage, regardless of whose name is on the title. Separate property, on the other hand, generally refers to assets one spouse owned before the marriage, or received individually through a gift or inheritance at any time.
Marital property is divided equitably between the spouses and each spouse generally retains ownership of their separate property. However, there are situations where state law allows what is usually considered separate property to be partially subject to division in order to arrive at a fair resolution.
One common scenario is when substantial contributions are made by the non-owner spouse toward the appreciation or maintenance of a separate asset. For example, one spouse owns a house before marrying. If, during the marriage, the other spouse contributes significantly to renovate and improve the property, either financially by investing personal funds or through considerable labor, a portion of the increased value can be deemed divisible. Michigan family courts recognize that both spouses’ efforts can enhance the value of an asset and they will allocate that increase accordingly.
Another illustrative situation is when one spouse owns a business prior to the marriage. If the non-owning spouse later invests time, money, or specialized skills into the business, and these efforts clearly enhance its success or market value, the court may consider awarding the contributing spouse a share of that increase in value. The purpose behind this award is to prevent unjust enrichment and to recognize the tangible impact the contributions have had on the asset.
Courts approach the division of separate property on a case-by-case basis. A court will not divide a separately owned asset simply because it grew in value during the marriage. Rather, the increase must be demonstrably linked to the other spouse’s direct efforts or resources. If a separate asset, like an investment or real estate, appreciates solely due to market forces without any contribution from the non-owner spouse, the increase typically remains the exclusive property of the original owner.
Additionally, Michigan courts have discretion to address cases of financial hardship. If distributing only marital property would render one party unable to meet basic living expenses, the court may look to the separate property of the other spouse to bring about an equitable outcome. In these instances, the judge balances the principle of respecting separate ownership with the need to avoid leaving one spouse in a precarious financial position post-divorce.
Every divorce is unique, and the specific facts will influence the court’s decision, such as the nature of the property, the contributions by each spouse and the financial circumstances after equitable distribution. A knowledgeable Michigan asset division attorney can advise you on how the law applies to your particular situation.
Dawson Family Law, PLLC in Troy advises Michigan residents on how to achieve a fair distribution of assets during divorce. To schedule a free consultation, please call 586-514-0084 or contact me online.
