Introduction

Property division in Michigan is governed by equitable considerations. Johnson v Johnson, 346 Mich 418 (1956). The specific facts and circumstances of each individual case are highly relevant. When dividing marital property, neither party is presumptively entitled to a greater share of the marital assets, nor responsible for a greater share of the marital debts.

I.  General presumptions in division of property and debts

• All property and debts are marital.
• Neither party is inherently entitled to a greater share of the marital assets or responsible for a greater share of the marital debts.
• These presumptions may be rebutted, but the burden of proof is on the party seeking to exclude asset as separate or seeking an unequal division of the marital estate.

II.  Separate property

• If a party makes a separate property claim, the court is required to make a finding whether the property is separate or marital.
• • A finding of separate property is not dispositive, see III below.
  • The burden of proof is on the party making the separate property claim.
  • Examples of separate property claims:
  • • Premarital assets, but see second bulletted item below.
    • Premarital accumulations of retirement benefits.
    • Gifts/inheritances from third parties.
    • Pain and suffering award.
  • Example of separate debt - student loans.
  • In a short term childless marriage, the Court of Appeals has recently held that appreciation on premarital assets which occurs before marriage is separate property, but appreciation after marriage may be included in the marital estate unless the appreciation is wholly passive. Reeves v Reeves, 226 Mich App 490; 575 NW2d 1 (1997).
  • Property acquired after the parties publicly manifest their intent to lead separate lives is marital property, but the contribution of each party to the acquisition of such property will take on particular significance. Byington v Byington, 224 Mich App 103 (1997)
• A party’s separate property can be opened for redistribution when one of two statutorily created exceptions is met. Reeves, supra.
• • Insufficiency of marital estate to meet needs of the other party. MCL 552.23; MSA 25.103.
  • Contribution to the acquisition, improvement or accumulation of the property by the other party. MCL 552.401; MSA 25.136. See Hanaway v Hanaway, 208 Mich App 278 (1995) regarding the care of children and the household as a contribution.

III.  Circumstances when marital property and debts may be divided unequally

This occurs in relatively rare circumstances. Some examples:

• Prenuptial agreement - see IV, below.
• Short-term childless marriage.
• • Definition of "short-term" is not precise, but would usually include marriages of less than two years and may include longer marriages, if there are no significant intervening factors.
  • Typical outcome:
  • • the court will attempt to restore the parties to their premarital status.
    • any increase/decrease in net worth is shared equally, but see Section II above.
  • A different outcome may be expected if one party has become economically disadvantaged by a significant intervening factor, for example:
  • • development of a serious health problem.
    • financial set back resulting from the marriage, such as giving up employment or relocating.
• When one or more equitable factors dictates an unequal property division:
• • Source/contribution, sometimes difficult to differentiate from "separate property" claim, see III above.
  • Need/health/age/disparity in income, though often adjusted through spousal support.
  • Fault, cannot be given disproportionate weight. Sparks v Sparks, 440 Mich 141 (1992); McDougal v McDougal, 451 Mich 80 (1996).
  • • Fault in the breakdown of the marriage rarely dictates a disproportionate property division unless the conduct is extreme or has economic consequences. Examples:
    • • Significant abuse - physical or emotional.
      • Blatant infidelity - particularly combined with diversion of income or assets.
      • Wanton dissipation of assets.
      • Criminal conduct.
    • Fault is not a basis for punitive inequitable division. If fault is established and there is no countervailing factor, shift would rarely exceed 5-10%.
• Fraudulent transfer or concealment of assets. In some cases, the hidden asset could be awarded wholly to the innocent spouse, but there is no automatic rule of forfeiture. Sands v Sands, 442 Mich 30 (1993).

IV.  Special Property Issues

• Prenuptial agreement controls if valid. Validity factors include:
• • Full disclosure of material facts before contract.
  • No fraud, duress, mistake or misrepresentation.
  • Not unconscionable when signed.
  • Facts and circumstances must not have changed since execution so as to make enforcement unfair and unreasonable.
  • See Rinvelt v Rinvelt, 190 Mich App 372 (1991).
• Advanced degree obtained during marriage as an end-product of a concerted family effort. Postema v Postema, 189 Mich App 89 (1991).
• Valuation date of assets.
• • Discretionary based on equities.
  • Typically, date of trial.

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