Every individual preparing for divorce is managing unique circumstances. The length of the marriage, their earning potential and other specific factors from the marriage can influence the outcome. For many couples in Michigan, the most contentious aspect of a pending divorce may be the division of their property.
State statutes require an equitable or fair distribution of marital property. Spouses can either work cooperatively to resolve their own property division disputes or they can take the case to family court and have a judge decide the most appropriate way to divide their shared property.
Some resources are not subject to division when couples divorce. What assets can spouses keep separate when preparing for property division proceedings?
Assets protected by an agreement
Younger couples are more likely than older couples to embrace prenuptial agreements as a common-sense form of protection when getting married. Prenuptial agreements help establish clear expectations for divorce proceedings, including what happens with marital property. Spouses frequently designate certain assets as separate property in prenuptial agreements. Businesses, real property and other valuable assets designated as separate in a prenuptial agreement are likely not subject to division when couples divorce.
Gifts and inheritances
Some resources come directly from outside parties for the benefit of one spouse. Maybe one spouse’s parents give them a valuable piece of jewelry every year for their birthday. Perhaps their grandparents left them a well-funded financial account as an inheritance. Gifts and inheritances typically remain the separate property of one spouse in the event of a divorce.
Resources earned before marriage
Many people begin marriages with valuable property already in their names. Spouses may have already started the business before getting married or may have purchased various household items, such as furniture. Resources owned prior to marriage are typically the separate property of the spouse who purchased those items before getting married. When spouses separate for some time before divorcing, assets acquired after separation may also be separate property when they divorce.
Commingling can make assets that could be separate vulnerable to division. People often need to perform a thorough financial review to identify separate property and affirm whether or not commingling may have occurred. They may need help identifying their separate property and pushing for an equitable distribution of marital assets, and that’s okay. Protecting assets as separate property is a common strategy used when preparing for property division proceedings.