One of the major concerns of divorcing couples is what property they can keep and what they’ll need to give up. Michigan follows an equitable distribution system, meaning courts aim to divide marital property fairly though not always equally. Marital property is subject to division while separate property is protected. But the line between separate and marital property isn’t inexorable. Michigan courts have broad discretion to treat separate property as marital in certain circumstances.
Marital property is generally defined as assets either spouse acquires during the marriage. Separate property is whatever a spouse owned before marriage, as well as inheritances received by one spouse, individual gifts and certain personal injury awards.
However, Michigan law provides for several circumstance in which separate property can become marital and thus subject to division, such as the following.
- Commingling — Separate property may be so mixed with marital assets that its origins can’t be traced. For example, inherited funds may be deposited into a joint account and used for living expenses or premarital savings may be used to pay off a joint mortgage. If a spouse can’t prove which portion is separate, the entire asset may be classified as marital.
- Joint titling – Adding a spouse’s name to a deed or account typically signals an intent to treat the asset as shared. Retitling your premarital home in both names or opening a joint investment account with inherited money are ways that separate property transforms into marital property.
- Jointly used property — Even if an asset remains in one name, courts may scrutinize how it was used. Spending separate funds on home renovations, launching a family business or paying off joint debts may convince a judge that the property was intended to benefit the marriage.
- Active appreciation — If a separate asset increases in value solely due to market forces, it usually stays separate. But if it appreciates because of both spouses’ efforts, such as improving a home or growing a business together, some or all of that increased value may be divided.
- Contribution and hardship exceptions — Courts can award a share of separate property if the other spouse contributed significantly to its growth or if failing to do so would leave one spouse in hardship after a long marriage.
To protect separate property, a spouse should keep inheritances and gifts in individual accounts, avoid joint titling and maintain good records or documentation tracing how assets were kept separate. If some mixing has already occurred, it may be possible to unwind portions of the property by careful tracing with professional assistance. For significant assets, a postnuptial agreement can clarify intentions.
All of this underscores the importance of informed legal advice. An experienced equitable distribution attorney can help trace funds, analyze appreciation and advocate for a fair settlement, ensuring your separate property remains protected—or recoverable—when the lines start to blur.
Dawson Family Law, PLCC has wide experience dealing with legal issues involving divorce in Michigan. Call me at 586-514-0084 or contact me online to set up a free consultation at my Troy office.
