Property in Divorce Proceedings: What is Separate Property?
In my last post, I gave a brief primer on Michigan's marital property designations.
Property can generally be divided into two broad categories: marital property and separate property. This post will briefly discuss basic information about separate property. This discussion is not exhaustive of all forms of marital property.
The basic starting point that the Court will look at in property division is: what did the parties bring into the marriage? Did those assets become co-mingled with marital assets? If not, then they are separate property and can be assigned solely to their original owner. Dart v Dart, 460 Mich 573, 597 NW2d 82 (1999), cert denied, 529 US 1018 (2000).
Some assets can have both marital and separate property portions, such as retirement benefits. Example: if a party has contributed toward a retirement account for 5 years before marriage, and 5 years during marriage, the 5 years of contribution during the marriage is most likely a marital asset. The 5 years of contribution prior to the marriage would most likely be considered separate property. Booth v Booth, 194 Mich App 284, 486 NW2d 116 (1992).
Appreciation value of separate property which is wholly passive, and not as a result of effort by either party during a marriage, remains separate property. Reeves v Reeves, 226 Mich App 490, 575 NW2d 1 (1997).
Inheritances received by one party during the marriage are separate property IF the inheritance was given only to one party - not both parties. If the inheritance is then treated as marital property by the parties, it can lose its separate property designation. Dart v Dart; Hanaway v Hanaway, 208 Mich App 278, 527 NW2d 792 (1995).
Educational degrees are typically considered to be separate property. although there is a concept that permits the other spouse to claim some of the tangible benefits of the degree(s) if the other spouse made a concerted family effort toward the degree-holder's success. Postema v Postema, 189 Mich App 89, 100, 471 NW2d 912 (1991).
In my next post I will discuss division of debts during the course of a divorce proceeding in Michigan.