UPDATES IN MICHIGAN FAMILY LAW

Separate Property | State Bar Takes a Position on Pending Legislation

Thanks to talented family lawyer James P. Ryan of Plymouth, Michigan for keeping family lawyers advised of pending legislation. He advised today that the SBM’s position on these House Bills was announced in the newest Public Policy Update.

HB 4672 Family law; marriage and divorce; division of property in divorce; enact statutory standards. Amends secs. 18 & 19 of 1846 RS 84 (MCL 552.18 & 552.19).
HB 4673 Family law; marriage and divorce; division of property on divorce; enact statutory standards. Amends sec. 1 of 1949 PA 42 (MCL 552.401).

Special Interests Attempt to Eviscerate Michigan Family Laws Re Property

Brian Dickerson wrote an insightful article published in the Detroit Free Press today. The past week has aroused deep concern among Michigan family court judges and family law attorneys who were only recently made aware of proposed legislation--two bills introduced last month by state Rep. John Walsh, R-Livonia--that would make radical changes in Michigan law about the division of appreciation in separate property of one spouse that has accrued during the marriage and also about how a trial judge may treat separate property if a division of marital property is insufficient to maintain a former spouse and children in his/her care.

The current laws in Michigan would allow the trial court judge to award an equitable share of the appreciation built during the marriage to a stay-at-home parent. In addition, a trial court judge could invade separate property of one spouse if the division of marital property would leave the non-titled spouse with insufficient means to support that spouse and any children in his/her care. The proposed statutes, if enacted into law, would eviscerate existing law and would take women and children back to the dark ages, resulting in servitude and poverty.

How will the court deal with separate property claims?

      Courts are often called upon to decide whether assets are marital property subject to division in a divorce or whether assets are separate property. In a recent Michigan Court of Appeals case, Maher v Maher, Wife [“W”] claimed that a Smith Barney investment account titled to both parties was marital property. The account had initially been funded with settlement proceeds from Husband’s [“H”] prior employment discrimination case—filed before the parties’ marriage, but settled during the marriage. W also claimed that the appreciation of that account was marital. The trial court found that the initial investment continued to remain H’s separate property, but the appreciation in the account during the parties’ marriage was distributable as marital property. Both parties appealed. The final result in the COA was that H got to keep not only the initial monies, but also all of the appreciation.

Separate property award | Effect of contribution

In Couvier v Laubernds, Docket No 272842, Michigan Court of Appeals, decided on February 5, 2008, the COA upheld almost all of a judgment entered in Chippewa County, Michigan. The husband appealed the trial court's award of significant property that he claimed as "separate property," including a farm he had owned prior to the marriage, but the COA affirmed. He also appealed the T/C's order that he pay Wife's attorney fees (about $20,000). The COA did correct one minor mistake (well, OK, not so minor:  $63,574.51) mistake in the balancing award made by the trial court to equally divide the marital property between husband and wife.

Treatment of "pre-inheritance transfer" of property in divorce

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.