Many times, clients come to our office, desperate to get out of a bad marriage, but thinking that there isn’t really any property to divide. In some cases, they’ll tell us that they don’t have any property, other than the marital home and their joint bank accounts. However, with a few questions, it often becomes clear that there is substantially more property to divide than litigants first realize. For example, are there retirement accounts? Are there pensions? Does one party, the other, or both, own a business? Does one of the litigants receive options or other perquisites as part of their employment? If any of those things are true, then you may be looking at a more complicated division of property than you first realized, but that may not be a bad thing. However, it is important to realize what counts as property and what doesn’t, which is why it is important for you to make sure that you have the right legal guidance.
What is “Property?”
Defining property for divorce clients is sometimes complicated. Not because clients don’t understand, but because, for lawyers, sometimes it is hard for us to comprehend how best to summarize the idea for the client. You can try to explain it as real property (houses, commercial buildings, rental units etc) versus personal property (jewelry, cash, bank accounts, furniture etc.) but that is often times confusing and fails to really capture it. Simply put, “property” in a divorce is anything of value obtained, earned, or received by either party during the time you were married. There are exceptions. For example, in most cases, receiving an inheritance from a parent or grandparent, if kept separate from other marital property, will often not be considered “marital property.”
As a result, “property” for purposes of figuring out which party gets what stuff in a divorce, is a broad concept. A business owned by one of the parties, that has an ascertainable value, is marital property, and the non-owning spouse, in most cases, would be entitled to have the business valued, and be bought out of their half of the value of the business. Retirement accounts and pensions also have ascertainable values, including, if necessary, a calculable future value for purposes of determining a proper buyout number. The fact that one spouse did not put a single penny into the pension, or did not work for one day at the business, does not take away from the fact that, as a general rule, the law views it as marital property.
“Property” also includes real property, such as houses, condominiums, commercial buildings, rental properties, and even empty lots, so long as there is value. In some cases, the house is worth less than what is owed. That may also be true of other assets that would be considered marital property. “Property” also includes debts and obligations, including mortgages, loans, credit cards, car notes and/or leases. All of those have to be split, often off-set against the values of other assets that must be divided. You will need to work closely with your attorney and be a transparent about your assets and debts as possible to ensure the most appropriate outcome as possible.
How is “Property” Divided?
The question is actually two questions. First, how much “Property” does each party get? Second, who does the dividing? Those are two important questions and having a basic understanding of each before meeting with an attorney can provide a much more productive conversation.
With regard to the first question, the answer is painfully complex. In short, Michigan is a common law divorce state. Therefore, the Michigan Courts will divide property equitably between the parties. Note that “equitable” does not necessarily mean “equally.” To determine an “equitable” division, the Court makes a determination based on certain factors. Those factors are known as the Sparks factors, as they were first fully enumerated in the case of Sparks v. Sparks. Most often, the result that is reached by applying the factors to the facts of an individual case, results in a division that also ends up being roughly equal. However, in some cases, the application of the Sparks factors results in an unequal division of property. You should talk with counsel about those exceptional cases, particularly if you feel that the facts in your case are not the norm. They may end up being par for the course, but they also may not, and in those unusual cases, special measures may need to be taken to try and ensure that your case is seen and understood in a way that will result in the most appropriate and beneficial outcome.
As to the second question, there are two ways that cases come to final resolution in family law. Cases are either settled through alternative dispute resolution; namely, mediation or arbitration, or they are presented before a Judge at a trial and the Court determines how property will be divided. For an explanation of the nuances of mediation, please see our blog on the webpage that provides more detail about the mediation process. However, the big difference between ADR and trial is who controls the outcome. Mediation is a party-controlled outcome, meaning, the two parties negotiate by use of a mediator (no, you don’t have to be in the same room with the other person), and reach an agreement, usually as a result of mutual compromise. Litigation is where each side presents all of the relevant and admissible evidence related to property division (and custody/parenting time/support if you have children) and the Court makes a decision. With a litigated outcome, the parties have little or no control over the end result, as the Court will enter an order dividing the property and establishing the terms and conditions of all issues related to your Judgment of Divorce.
“Property” division in divorce is complicated. If you don’t understand what counts as property, or what things are considered to have value, you will end up losing out on a significant amount of money or property in your divorce judgment. You need to have an attorney who not only understands what counts as “Property” and what does not, but who also understands how to effectively and strategically ensure that you get every bit of what you are entitled to in a “Property” settlement. At Fowler & Williams, PLC, we have primarily focused on high-conflict divorce matters and have successfully resolved complex and exceptional property disputes for many of our clients. We would love to do the same for you. Call or email us for a consultation, so we can get started today working to get you what you earned and deserve from your divorce.