Understanding Marital Asset and Debt Division in a Michigan Divorce

 Posted on October 13,2020 in Divorce

When a couple is getting divorced, property division is often the most contentious and time-consuming aspect of the process. It can feel insurmountable to have to divide every asset you and your soon-to-be ex-spouse have between you. However, there is one other thing that must be divided upon the occasion of divorce: the debt that both of you hold. Both must be divided equitably in Michigan.

Dividing Assets

There are several factors that a Michigan judge will consider when determining how assets are divided, but equity is the prevailing focus. Many people confuse equity and equality; equity is a legal term meaning fairness in all respects, while equality is more of a colloquial concept. A judge will weigh a list of factors and determine the fairness of the proposed distribution. Some of these factors include:

• Whether or not a spouse is already receiving or will receive spousal support

• Whether or not there is a prenuptial agreement, and if so, what its provisions entail

• Each spouse’s age, health, and other factors that affect the quality of life and life expectancy

• Any obligations from a prior marriage (such as child support or alimony to pay)

• Tax implications of dividing the marital property

Property that is already in the name of one spouse can remain so in most circumstances, but sometimes it can become marital property essentially without your knowledge. If, for example, your spouse makes deposits into your personal bank account, that account may convert to marital property depending on how much they put in, why, and how the money was intended to be used.

Dividing Marital Debt

In addition to dividing assets between the spouses, any outstanding marital debt must also be allotted. Dividing marital debt is somewhat simple as long as marital and non-marital obligations have been kept separate. If there has been commingling (intermixing) of the two, then the determination of whose debt is whose gets muddled and unclear. Non-marital property can actually become part of the estate into which it was commingled, meaning that the property of one spouse may essentially transmute into the property of both. Michigan does have a right of reimbursement, meaning that you can recoup some of the lost costs if your property is transmuted into marital property, but this can only be done if you are able to establish by clear and convincing evidence that it was formerly non-marital property.

Also, if you make more money or are otherwise better off financially, you may be charged with repaying a debt that is not in your name, since you are better equipped to do so. Be advised that if your name is on any accounts or obligations, such as a car loan or credit card account, you may wind up paying the balance even if the debt is not assigned to you. A judgment of divorce does not negate a creditor’s ability to come after you for obligations on which you co-signed.

Safeguard Your Financial Affairs by Working With a Livonia Divorce Lawyer

If you or your spouse have incurred significant debts, you may very well be charged with repaying the money you did not spend. Engaging a competent legal professional can help cut down those odds. The dedicated Novi, MI property division attorneys at Elkouri Heath PLC know how easy it can be to wind up on the proverbial hook for your spouse’s debt, and we will do our very best to minimize the possibility. Call us today at 248-344-9700 to set up a free consultation.

Source:

http://www.legislature.mi.gov/documents/mcl/pdf/mcl-chap557.pdf