September 28, 2022

How Separate Property Can Become Marital Property in a Divorce

Generally, under Michigan law, any property acquired by either spouse during a marriage is considered to be marital property. Even if a banking account or some other asset is in one spouse’s name, the other spouse generally has some property right to it. This only becomes an issue if the couple decides to divorce.

During a divorce, couples need to divide their shared life, which means they need to divide all of their marital property. To start this process, couples need to first determine what is separate property and what is marital property. As discussed briefly above, marital property is generally property that either spouse acquired during the marriage.

Separate property is generally property that either spouse owned before the marriage. It can also include gifts and inheritances that were given to only one spouse during the marriage. This may seem fairly straightforward, but it can become complicated depending on how separate property was used during the marriage.

Couples can commingle separate property with marital property

People are generally able to keep any value increases to separate property during the marriage as long as the increases in value do not involve any overt actions by the spouse. For instance, if a spouse owned stock prior to the marriage and it increased in value based on the market, they may keep the increase in value. However, if spouses improve the property during the marriage and it increases in value as a result, the increase in value may be split during a divorce. Also, if couples commingle their separate property into a joint account, for instance, it may cease being separate property and be divided in a divorce.

The division of property can become very complicated during divorces in Michigan. People need to value all of their property, determine whether it is marital or separate and then finally divide the marital property between them. Simply valuing the property may be complicated and involve multiple appraisers. Experienced attorneys understand the process and may be able to guide one through it.