» Divorce

A Michigan court can award the retirement or pension account of one spouse to the other in a divorce using a “qualified domestic relations order” or an “eligible domestic relations order.” This order, signed by the judge, orders the plan administrator to divide the account as instructed (e.g., 50/50) and then the one spouse (e.g., the wife) will become part owner of the other spouse’s (e.g., the husband’s) account. In this example, if the husband cannot draw on the account until he is 55 years old, then the wife must wait until the husband is 55 years old to take her own share. His eligibility criteria applies to her—and it is his age and years of service that count, not hers.

If retirement monies are in an IRA (individual retirement account), a judgment of divorce with specific terms can be used to distribute the IRA.

There are some computerized formulas that attorneys use to get an idea of whether you will owe alimony and if so, how much and for how long. These formulas are not binding on the court like child support guidelines are.

The court considers the following factors in making a decision as to whether to award alimony:

1. The past relations and conduct of the parties;
2. The length of the marriage;
3. The parties' ability to work;
4. The source of an amount of property awarded to the parties;
5. The age of the parties;
6. The parties' ability to pay alimony;
7. The present situation of the parties;
8. The needs of the parties;
9. The health of the parties;
10. The parties' prior standard of living and whether either is responsible for the support of others;
11. General principles of equity.

The main purpose of alimony is to balance the incomes and needs of the parties in a way that would not impoverish either party. There is no sense of “entitlement” when it comes to alimony.

If the court decides to award alimony, it must then consider the following factors in deciding the amount of alimony:

1. The duration of the marriage;
2. The contributions of the parties to the joint estate;
3. The age of the parties;
4. The health of the parties;
5. The parties' station in life;
6. The necessities and circumstances of the parties;
7. The earning ability of the parties.

Some courts are unwilling to award any substantial amount of alimony unless the parties have been married for 10 years or more. Shorter marriages may warrant some form of “rehabilitative alimony.”

In Michigan, parties can agree to an award of alimony that cannot be modified.  The court itself cannot put these limits on alimony, but the parties can and then the court will enforce it.

If alimony is “barred” at the time of the divorce with regard to one of the parties, then the court cannot later award alimony to that party.

Alimony is the same as spousal support.  The words “spousal support” are preferred these days.

The only grounds for modifying a property division after the divorce is final are grounds relating to fraud, mutual mistake, failure to disclose property or debt, and similar issues.  Even then, a party has one year at the latest to file a motion to amend the judgment of divorce in most circumstances.  If a case has gone to trial and there is a judgment from the court, one option is to file a motion for reconsideration if the judgment is unacceptable.  The second option is an appeal to the Court of Appeals, which must be filed within 21 days of entry of the judgment.  Timing is everything.

There are factors that govern the distribution of property in Michigan during divorce:

1. duration of the marriage;
2. contributions of the parties to the marital estate;
3. age of the parties;
4. health of the parties;
5. life status of the parties;
6. necessities and circumstances of the parties;
7. earning abilities of the parties;
8. past relations and conduct of the parties;
9. general principles of equity.

The court starts by requiring the parties to identify all the property of the marital estate. Excluded from that is property that a party owned prior to the marriage and retained in his/her own name as well as gifts and inheritances.

The next step is to evaluate the property. If the property is like-new and recently acquired, then the cost at the time of purchase might still represent the value. Often, the parties can actually agree on a value. Other times, the parties obtain appraisals from third parties or agree to a joint appraisal. If property that is owned individually actually appreciated during the marriage through the active efforts of one or both parties, then the court can include the amount of appreciation but not the underlying value. The parties have to remember to subtract any indebtedness associated with the property and just consider “net value.”

As an aside, if there is a pension or retirement fund that was acquired partly during the marriage and partly before the marriage, the court includes only the portion that was earned during the marriage. This is called the “coverture fraction.”

Some appraisals are a little challenging, as with start-ups or small companies.  A certified public accountant is usually engaged to appraise business interests, including stock options.

The last step is to sell or distribute the property. If it is sold, the parties usually split the net proceeds of sale. If it is distributed in kind, then the parties keep track of the value that is associated with that asset to be sure that, in the end, the final distribution of all property and debt is fair.

This approach would not apply if the parties had a pre-nuptial agreement that was enforceable.

You will be taxed at your own rate if you liquidate the account. If this is your spouse’s account, however, you will avoid the 10% penalty if you liquidate the account before you are 59 ½ years old.

In today’s world, the courts no longer consider a move out of the former home as “abandonment.” If there is a risk of domestic violence or if the children are exposed to considerable conflict, it is better to separate as soon as possible.

Despite the fact that the courts no longer consider it “abandonment” if one party moves out of the marital home, minor children may experience the move as an abandonment.  The ideal is to have a written agreement about parenting time or a court order for parenting time before moving out of the house when there are minor children.

Most attorneys will not represent both spouses. It is possible, however, for one of the spouses to hire an attorney and then for that attorney to do the paperwork. The other spouse would just represent himself or herself (which is called “in pro per”) in that case.

The other option is for the two spouses to hire a mediator who would help to negotiate the case.  That mediator could then draw up a proposed agreement to be incorporated in the judgment of divorce.  Mediators suggest that an attorney review the agreement for each individual party before it is signed.

Most attorney-mediators are familiar with the law that applies to divorces and custody actions, and he/she would probably be willing to explain the options that are available to resolve custody, parenting time, child support, property and debt division, and spousal support issues.

Signing an agreement is not the end of the divorce action.  A judgment of divorce must be entered by the court.   The mediator may, or may not, be willing to draft a judgment of divorce.  If an agreement has been signed, any competent attorney could draft a judgment of divorce that incorporates that agreement.

There is a mandatory six-month waiting period to get a divorce if you still have any minor children and a two-month waiting period if there are no minor children (or if you never had children). Sometimes cases take a long time to resolve; however, the Michigan Supreme Court wants the trial courts to finalize divorce cases within a year, but highly contested cases can take longer.