Sunday, November 14, 2010

Division of Marital Property

Statutory Authority

Did you know Divorce law is based on statutes. There is no authority to divide property, for example, absent an applicable statute. Charlton v Charlton, 397 Mich 84; 243 NW2d 261 (1976). Here we will look at what the statute says.

Terry Ray Bankert is a Michigan Attorney specializing in Family Law, and works as a Flint Divorce Attorney, Flint Divorce lawyer, Genesee Divorce Lawyer and Genesee Divorce Attorney.(SEO) For help with your questions call 810-235-1970. Or

The primary statutory authority for a court to award property in a divorce case is MCL 552.19:

When there is an  annulment of a marriage, a divorce  or a judgment of separate maintenance, the court may make a further judgment for restoring to either party the whole, or such parts as it finds  just and reasonable, of the real and personal estate that shall have come to either party by reason of the marriage, or for awarding to either party the value thereof, to be paid by either party in money.
The statute is hard to read and apply  and he courts have defined  the marital estate. The process has been slow and evolving, and even now there is no legal or simple definition of the marital estate.
III. WHAT IS  Marital Property

 Reeves v Reeves, 226 Mich App 490; 575 NW2d 1 (1997), lv den 459 Mich 882; 586 NW2d 746 (1998), is the law in Michigan. The DOCTRINE of Reeves was approved by the Michigan Supreme Court in Dart v Dart, 460 Mich 573, 585 n 6; 597 NW2d 82 (1999).

This case says:
The distribution of property in a divorce is controlled by statute. MCL 552.1 et seq. (subsequent citations omitted). In granting a divorce, the court may divide all property that came “to either party by reason of the marriage….” MCL 552.19 ….Reeves at 493. [Emphasis in original.]

The Reeves  case emphasizes that the assets to be divided in a divorce case are those which occurred during the marriage:

When apportioning marital property, the court must strive for an equitable division of increases in marital assets “that may have occurred between the beginning and the end of the marriage.” Bone v Bone, 148 Mich App 834, 838; 385 NW2d 706 (1986). Id at 493. [Emphasis in original.]

Reeves then repeated the proposition found in Byington v Byington, 224 Mich App 103, 114, n 4; 568 NW2d 141 (1997):
Your divorce Judge has the initial obligation  when dividing property in divorce proceedings to determine marital and separate assets. Id at 493–494.

Terry Ray Bankert is a Michigan Attorney specializing in Family Law, and works as a Flint Divorce Attorney, Flint Divorce lawyer, Genesee Divorce Lawyer and Genesee Divorce Attorney.(SEO) For help with your questions call 810-235-1970. Or

Reeves then sets forth the construct for the division of property in a divorce:

Generally, the marital estate is divided between the parties, and each party takes away from the marriage that party’s own separate estate with no invasion by the other party. However, a spouse’s separate estate can be opened for redistribution when one of two statutorily created exceptions is met. MCL 552.23 and 552.401 (additional citations omitted).

Finally, Reeves sets forth the order for the analysis:

After properly recognizing the parties’ separate estates and the marital estate, the court may consider whether invasion of defendant’s estate is necessary. Before the court may invade defendant’s separate estate, it must specifically find that one of the two statutory exceptions exists. Id at 497–498.

Despite the analysis in this critically important case, the questions of what is “property”, and from that, what is “marital property” are still left unanswered. There is no statute, court rule, or case law which expressly defines “marital property”. Ultimately, what is “property” is limited only by the creativity of the matrimonial lawyer, and what is “marital property” is anything which is not “separate property”.

Recently, in Cunningham v Cunningham, ___ Mich App ___, ___ NW2d ___ (Docket No. 285541, decided 7/13/10), the Court of Appeals noted the difficulty in applying Reeves to distinguish between separate and marital property:

The categorization of property as marital or separate, however, is not always easily achieved. While income earned by one spouse during the duration of the marriage is generally presumed to be marital property, Byington [v Byington, 224 Mich App 103 568 NW2d 141 (1997)], 224 Mich App at 112, there are occasions where property earned or acquired during the marriage may be deemed separate property. For example, an inheritance received by one spouse during the marriage and kept separate from marital property is separate property. Dart v Dart, 460 Mich 573, 584–585; 597 NW2d 82 (1999). Similarly, proceeds received by one spouse in a personal injury lawsuit meant to compensate for pain and suffering, as opposed to lost wages, is generally considered separate property. Washington v Washington, 283 Mich App 667, 674; 770 NW2d 908 (2009); Pickering [v Pickering, 268 Mich App 1, 706 NW2d 835 (2005)], 268 Mich App at 10. Moreover, separate assets may lose their character as separate property and transform into marital property if they are commingled with marital assets and “treated by the parties as marital property.” Pickering, 268 Mich App at 12–13, citing Wilson v Wilson, 179 Mich App 519, 521, 524; 446 NW2d 496 (1989). The mere fact that property may be held jointly or individually is not necessarily dispositive of whether the property is classified as separate or marital. See Korth v Korth, 256 Mich App 286, 292; 662 NW2d 111 (2003); Reeves, 226 Mich App at 492, 495–496.

The Cunningham panel held that the husband’s worker’s compensation benefits received during the marriage for an injury prior to the marriage were nonetheless marital property because they represented a replacement of wages that would have been earned during the marriage. The panel noted some confusion as to whether a lump sum award received after years of litigation was a settlement of the pre-marriage claim via redemption (which logically would be the husband’s separate property) or rather was merely retroactive benefits, i.e. replacement wages, for earnings that would have occurred at least partially during the marriage (a portion of which would be marital property). . Principle Source ICLE 09/16/10 . Principle Source ICLE 09/16/10