When is property considered separate property, and therefore not divisible in a divorce?
Courts make the distinction between marital property and separate property. Marital property is simply property acquired during the marriage. However, the Michigan statutes fail to define separate property. Nevertheless, courts typically adopt the rule that separate property is property that is not divisible in a divorce because it was owned prior to marriage or acquired during marriage through a gift or inheritance. If it was owned by a party prior to marriage, it normally will be awarded to that party.
But, there are times when separate property can be divided in a divorce. Michigan case law supports the proposition that property claimed by one spouse to be separate property may be divided if the other spouse meets on of two statutory tests:
- Contribution Test: that the claimant contributed to the "acquisition, improvement, or accumulation of the property" MCL 522.401.
- Need Test: that the award to the claimant out of marital assets is "insufficient for the suitable support and maintenance" of the claimant and any children in their care. MCL 552.23.
What happens if you received an inheritance during the marriage? If you receive an inheritance while you are married, and want that inheritance to remain separate property, you must never co-mingle it. What does this mean? It means that once you have co-mingled it with joint property, you cannot separate it. It's like making a cake. Once the ingredients have been mixed together, you cannot separate them out, as they are indistinguishable. Hence, if you want to protect an inheritance, you need to maintain it as separate funds. Once the funds have been co-mingled, it will likely be considered marital property.
If you find yourself in the midst of a divorce, and have received an inheritance, or owned substantial property prior to your marriage, you need to know how to protect your property during your divorce. As this is a complex subject, you should contact a family law attorney who can provide you with a legal opinion based off your specific facts.