How is property distributed in a Michigan divorce?

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.