Brett Schlender
Foster Swift Collins & Smith PC
Understanding how courts divide marital property first requires an explanation of the marital estate. An “estate” in this sense is a paper classification of the property that is considered “marital” as opposed to “separate.” Before a court can award each party a fair share of the estate, it must first identify what property belongs in the marital estate and then assign values to the property.
Michigan has not adopted a singular definition of “marital property,” but it includes all property either spouse has acquired by reason of the marriage. When the spouse acquired the property and how he or she paid for it are important considerations. Also, irrespective of which spouse owns the property, some or all of an asset may become marital when one spouse contributed to the property’s acquisition, improvement, or accumulation. This, the classification stage, is where property disputes often originate. Whether an asset is marital or separate can meaningfully affect the gross value of the estate.
Once the boundaries of the marital estate are drawn, the assets are each assigned a value. Value may be determined by an appraisal, recent arm’s length sales, or, in some cases, a party’s testimony. Since asset values can rise or fall significantly during the course of a divorce, the valuation date can become a point of contention. Courts value marital property as of the date of trial unless persuaded another date is more appropriate.
After classification and valuation comes division. Courts divide property by considering several factors and weighing those that are relevant in light of the facts. The most commonly cited factors include: the length of the marriage, the parties’ needs, whether the parties have minor children and, if so, what the children’s needs entail, the parties’ capacity to earn income and maintain property, the source of the property, a party’s role in acquiring the property, and a party’s responsibility for causing the divorce. Though fault is a factor, rarely will it have a meaningful effect on the outcome.
A court may award either the property itself or “the value thereof” to each party. For example, in most cases a party will either receive the marital home or value equal to one-half of the home equity. Though nothing precludes parties from remaining co-owners of property following a divorce, the risks are self-explanatory. If no party has the personal cash flow to maintain an asset or for some other justifiable reason, a court may order an asset’s sale and dictate how the proceeds are allocated.
However the property is divided, equity is the goal. An “equitable” division does not guarantee 50 cents on each dollar of assigned value. Instead, it aims for fairness under all the circumstances. Michigan courts begin with a presumption that an equitable property distribution will be roughly congruent. To depart from rough congruence, a court must specifically identify the reasons for its departure.
Despite its guidelines, equitable division does not produce predetermined outcomes. Obtaining an equitable property division, by settlement or court ruling, requires more than a calculator. Skilled advocates have a knack for identifying and articulating a client's needs within an overall theory of fairness. Some people may benefit from liquid assets to help begin a new career or to invest elsewhere. Others with a stable career may prefer a greater share of retirement savings. Or, some might forego property in exchange for an intangible benefit, such as more time with the kids or a waiver of spousal support.
Property division is both an art and a science. You will want an attorney on your side who can effectively persuade others of an asset's market value, but it is equally important to partner with an advocate who helps you determine what an asset is worth to you.
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Foster Swift attorney Brett R. Schlender specializes in divorce, custody, child support, spousal support, and other disputes personal in nature. He has settled multi-million dollar marital estates, prevailed in complex asset-valuation disputes, and helped clients tailor divorce settlements to meet their foreseeable needs.
Reprinted with permission from Foster Swift’s Family Law Advocate blog at yourfamilylawadvocateblog.com.
