Dividing Property in a Michigan Divorce: 5 Common Questions
Dividing Assets & Debts in a Michigan Divorce
5 Key Questions Answered
Dividing property and debt is one of the toughest parts of divorce. Between the house, retirement accounts, and even a family business, figuring out who gets what can feel overwhelming. Because financial stability after divorce depends heavily on how property is divided, it’s important to understand how Michigan law approaches these issues.
Here are five of the questions we hear most often—and what you should know if you’re facing divorce in Michigan.
1. What is “Equitable Distribution”?
In Michigan, “equitable distribution” isn’t a 50/50 split. Instead, marital property is divided in a way that is fair—not necessarily equal. If spouses cannot reach an agreement on their own, a judge will step in to decide how assets and debts should be divided. In making that decision, the court may consider factors such as:
The length of the marriage and each spouse’s age
Each spouse’s income, assets, and debts
Contributions to the household, career advancement, or education of the other spouse
The custodial parent’s need to remain in the marital home
Both parties’ health and future financial needs
Tax consequences of dividing certain assets
The goal is to reach a fair result that allows both spouses to move forward and maintain financial stability.
2. What counts as marital property?
Not all property is treated the same way in a divorce. Michigan courts typically divide property into three categories:
Marital Property: Assets and debts acquired/accumulated during the marriage, such as wages, homes, retirement savings, mortgages, and credit card balances.
Separate Property: Property a spouse owned before the marriage, or gifts and inheritances received individually. However, separate property can lose its status if it is “commingled.” For example, if inheritance funds are used to purchase a jointly titled home, that home may then be considered “marital” property and the party who received the inherited funds would not be able to off-set those funds/equity as “separate” property.
Divisible Property: Property acquired or that changes value between the date of separation and the final divorce judgment.
Accurately classifying and valuing these assets is critical to achieving a fair outcome.
3. Do prenups actually work?
Yes—if they’re done right, a nuptial agreement can help define which assets will remain separate in the event of divorce. A prenuptial or postnuptial agreement can make property division much smoother. But an agreement can be thrown out if it was signed under pressure, lacked financial disclosure, or wasn’t executed properly. Even without a prenup, couples can create a separation agreement—a legally binding settlement outside of court.
Because these agreements can be difficult to modify later and can oftentimes create more problems if not prepared properly, it’s essential to get sound legal advice before signing nuptial agreements or separation agreements.
4. Who gets the house?
For many families, the marital home is the most emotional—and financially significant—asset. Courts often prioritize the needs of minor children, which may allow the custodial parent to stay in the home.
However, the spouse remaining in the home must be able to afford ongoing expenses such as the mortgage, taxes, and upkeep. If neither spouse can maintain the home on their own or if neither spouse can afford to refinance the mortgage (to remove the other party’s name from the mortgage and/or pay the other party their share of the equity in the home), selling the property and dividing the proceeds may be the most practical solution.
5. How are businesses and real estate handled?
Businesses and real estate require special care in divorce cases. Their values are not static and can change quickly depending on the market or financial performance.
Real Estate: A professional appraisal is typically needed to determine current market value. Once established, the spouses can decide who will retain ownership and whether any equity in the property should be paid to the spouse not retaining ownership or whether the property should be sold and proceeds divided between the spouses (or not).
Businesses: Valuation often involves reviewing financial statements, market conditions, and industry trends. Without an accurate valuation, agreements can collapse or unfairly benefit one party at the expense of the other. However, business valuations can be very expensive. It is wise to seek legal advice on whether a business valuation is necessary or not.
Additionally, deferred compensation—such as stock options or executive bonuses—must also be carefully valued. Overlooking these assets can create an unfair division of property and long-term financial consequences.
Bottom Line
Property division in a Michigan divorce can be complex, but you don’t have to navigate it alone. With the right guidance, you can protect your interests and move forward with clarity and confidence.
The attorneys at Buckman Macdonald & Brown have extensive experience handling divorces involving real estate, businesses, and complex financial portfolios. We work to ensure assets are valued properly and divided fairly, so our clients are positioned for the next chapter of their lives.