In Wells v Wells, Docket No 271465, decided on November 20, 2007, the COA upheld the Ottawa County Circuit Court where W challenged the T/C's distribution.
W appealed the T/C's exclusion from the marital estate of H's partnership interest in a "Family Farm" that was owned and operated by H and his brothers. The COA characterized this property a pre-inheritance transfer from H's parents to their sons, which should be treated just as inheritances are by the T/C. The COA concluded that the T/C properly ruled that the partnership and his stock in the partnership formed with his brother was H's separate property and was properly excluded from the marital estate.
In affirming the T/C, the COA noted that an inclusion of H's separate property was entirely discretionary with the T/C and that the court's decision was properly based upon the circumstances of the case. Several factors that the T/C cited to support its decision to exclude H's inheritance from the marital estate, included the fact that there were non-party co-owners, development restrictions on the land, and W’s fault in causing the breakdown of the marriage. Published cases to support this decision include Demman v Demman, 195 Mich App 109, 112 (1992), and Reed v Reed, 265 Mich App 131, 157-158 (2005).
In addition, the T/C noted that caution should be used when fashioning a property award that would inevitably result in the sale of a family farm.
W also appealed the T/C's failure to apply either of the statutory exceptions that permit invasion of separation property. With respect to the exception contained in MCL 552.401, the COA said that W failed to prove that she had contributed to the acquisition, improvement, or accumulation of the property. It was proper to exclude this asset since "[a]ny appreciation in the value of H's partnership interest consists of the passive appreciation in the land that should not be included in the marital estate." McNamara v Horner, 249 Mich App 177, 183-184 (2002).
With respect to the exception in MCL 552.23(1), which permits the T/C to invade separate property when “the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party,” the COA stated that W presented no evidence that the division of marital assets was insufficient for her suitable support and maintenance as required by the statute. The T/C had, in fact, granted W alimony, in part, as an effort to offset its decision not to invade defendant’s partnership interest.
Significantly, W challenged the T/C's finding that her conduct was "fault" that caused the breakdown of the marriage justifying an award of 55% of the marital assets to H and only 45% to W. The COA upheld the T/C saying that there was plenty of evidence that W had engaged in an affair prior to filing for divorce. Additionally, apparently the T/C factored in W's living arrangement with her paramour when deciding the amount of alimony. W complained that the T/C erred in finding that she "lived in a two-income household." The COA affirmed the T/C, extensively citing specific facts that supported the T/C's decision on these two issues. McNamara, supra and Hanaway v Hanaway, 208 Mich App 278, 295 (1995) were cited in support of this limitation on the spousal support award.
You may read Wells v Wells here.
For more information on separate property issues, see Jeanne Hannah's website.