Property Settlement

Michigan is an “equitable distribution” state; a court divides assets in an equitable (or “fair”) method.

Michigan is an “equitable distribution” state, meaning that a court divides assets in an equitable (or “fair”) method. Equitable does not necessarily mean “equal”, rather equitable distribution means to look at the financial situation of each spouse based on a number of factors such as length of marriage, age, income of each spouse, earning potential, and education level among many others. The court may also consider “fault” for the breakdown of the marriage to determine asset distribution.

Typically, however, most marital assets in Michigan are split on a roughly 50/50 basis. In order to make the split, the total value of marital assets must first be determined. And this is where things can get tricky. Using various methods of “discovery” to determine facts about each spouse, a proposed settlement can be made. This process can be lengthy and complex, depending on assets involved (especially businesses), and whether a spouse is suspected of hiding assets or not.

Robert B. Relph takes great pain in securing and protecting the assets of his clients. His experience and tenacity will help ensure clients receive what is rightfully theirs in the settlement.

Divorce Settlements Involving Small Businesses

Of special consideration are those cases where a small business is owned by the parties involved in the case. For the purpose of valuation, it is critical that attention be paid to the often numerous documents necessary to properly evaluate the income and expenses of a small business. Tax returns themselves are usually not sufficient, because they can easily understate or overstate the income of the business.

In some cases, a judgment call by the attorneys and/or spouses can be made early on whether the business should be valued by a neutral business valuation expert or not, the cost of which can run thousands of dollars. Some small businesses do not deserve to be valued, as they generate only modest earnings, while others generating more substantial earnings must be valued by a business expert.

Frequently Asked Questions

The questions and answers below are intended to provide general information with regard to common questions on property settlement based on laws in the State of Michigan. They are not intended to constitute legal advice and should not be relied upon in lieu of consultation with a divorce specialist or attorney.

Similarly, since every case is different we recommend consulting with a divorce specialist or attorney for advice related to your specific set of circumstances.

In the vast majority of cases, property acquired during the marriage is divided approximately equally. Michigan law does not require that it be mathematically and perfectly equal, only that it be fundamentally fair and equal. If a person brings property or investments into the marriage, and that property or investment is kept in that person's separate name, it is highly likely that person will be able to take that property back out of the marriage as a separate asset, and not part of the property settlement.

The possibility of hiding property or money always requires that the offended spouse have very competent legal advice and representation, as there are a number of ways to investigate and discover whether property or money is being hidden. An analysis of all the parties' financial records is certainly the most logical place to begin. If there is a large enough marital estate and the possibility of significant hidden assets, a well-qualified attorney may decide to hire a forensic accountant who will assist the attorney in analyzing the parties' financial records. Hidden assets of one of the most serious issues involved in the property aspect of divorce cases, and requires careful thought and planning with well-qualified professionals.

If there is a divorce case pending and property is being removed and secreted or sold, an injunction against such activity should be entered immediately. If there is any suspicion this might occur, it is always wise to have records or pictures of all the personal and real property owned by the parties.

Determining the value of property is either done by agreement, or professional evaluation by appraisers. However, it is not always necessary to decide the value of personal property, provided the parties can agree on how to divide the personal property without necessarily placing values on each item. In many cases, parties get together by themselves and divide up their personal property according to their needs and interests, and without involving appraisers, attorneys or the court. This is the most efficient and cost-effective way to divide personal property.

The business itself will not be "split" or sold and divided up in most cases. The principal operator or manager of the business will likely keep the business, and pay the non-owner spouse his or her share of that business. Valuing a closely held corporation can be a complicated process involving business valuators/CPA's.

In many cases, parties get together by themselves and divide up their personal property according to their needs and interests, and without involving appraisers, attorneys or the court. This is the most efficient and cost-effective way to divide personal property.

Any funds accumulated in a retirement plan during the marriage are subject to being divided between the parties. “Accumulated during the marriage” means that if a part of a retirement plan was earned prior to the marriage that part of the plan would likely be excluded from division as a separate asset owned by the plan holder prior to the marriage. Since there are several ways to value a retirement plan where the holder has some premarital interest, it is critical to consult with a well-qualified attorney regarding how to value the difference between the premarital and marital portions of the plan.

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