Property in Divorce Proceedings: What is Marital Property?
One of the most common topics that people who are contemplating a divorce ask their attorneys about is property division.
Property can generally be divided into two broad categories: marital property and separate property. This post will briefly discuss basic information about marital property. This discussion is not exhaustive of all forms of marital property.
Marital property in the State of Michigan is:
[P}roperty “accumulated through the joint efforts of the parties during their marriage.” Leverich v Leverich, 340 Mich 133, 137, 64 NW2d 567 (1954). The definition provided in Leverich was expanded to 'generally' include “any increase in net worth that may have occurred between the beginning and the end of the marriage.” Bone v Bone, 148 Mich App 834, 838, 385 NW2d 706 (1986). The increase in value of the parties' separate property that is the result of the active involvement of one of the parties can also be considered marital. Reeves v Reeves, 226 Mich App 490, 493, 575 NW2d 1 (1997). Increase in value of separate property that occurs solely due to passive appreciation is typically not considered marital.
Property that is earned or acquired during the marriage is considered marital in nature, even if it is received after the conclusion of the divorce proceeding. Example: an employment bonus earned during the divorce but paid after the divorce proceeding has ended. Byington v Byington,224 Mich App 103, 568 NW2d 141 (1997); Darwish v Darwish, 100 Mich App 758, 300 NW2d 399 (1980).
Items or services received as a substitute or alternative to cash earnings is also considered marital property in nature. Example: disability benefits, a pension plan (earned during marriage) Boyd v Boyd, 116 Mich App 774, 323 NW2d 553 (1982) (pension benefits); Evans v Evans, 98 Mich App 328, 296 NW2d 248 (1980); Miller v Miller, 83 Mich App 672, 269 NW2d 264 (1978). Accumulated vacation or sick time, if exchangeable for money, can be considered marital. Lesko v Lesko, 184 Mich App 395, 457 NW2d 695 (1990).
Non-marital property, known formally as separate property in Michigan, can become marital property if the owner of the separate property takes steps to convert the separate property into a marital asset. Example: inherited monies invested into a marital business will not typically be factored out of the asset valuation, absent an agreement between the parties.
In my next post I will discuss Separate Property (non-marital property) in Michigan.