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DIVORCE 49: IT WAS FAIR AND EQUITABLE TO AWARD BOTH PARTIES THEIR OWN APPRECIATED 401(K) ACCOUNTS.

Plaintiff appeals as of right the trial court’s divorce judgment, challenging the decision to award each party their respective 401(k) accounts. Plaintiff argued in the trial court that she was entitled to a portion of the appreciation that accrued to defendant’s 401(k) during the marriage as a marital asset under MCL 552.18(1). To the contrary, defendant argued that plaintiff was not entitled to any of his 401(k) because both parties contributed the same amount of money to their respective 401(k) plans during the marriage and defendant’s 401(k) account only grew more because he started out with more—which was his premarital, separate property. The trial court agreed with defendant, holding that plaintiff was not entitled to any portion of defendant’s 401(k). Plaintiff appeals.

STANDARD OF REVIEW

 In a divorce action, this Court reviews for clear error a trial court’s factual findings on the division of marital property and whether a particular asset qualifies as marital or separate property. Findings of fact are clearly erroneous when this Court is left with the definite and firm conviction that a mistake has been made. We consider whether a trial court’s dispositional rulings are fair and equitable in light of its findings of fact and will reverse only if convinced that the disposition is inequitable.

ANALYSIS

The goal in distributing marital assets in a divorce proceeding is to reach an equitable distribution of property in light of all the circumstances. Typically, each party will be awarded their own separate property without division with the other party. There is no dispute in this case that the amount of defendant’s 401(k) account that accrued up until the parties were married was defendant’s separate property and not subject to division as marital property. The growth of Defendant’s 401(k) was achieved with contributions from marital property.  However, we conclude that, under the circumstances of this case, the trial court’s decision to award each party their own appreciated 401(k) plan was fair and equitable. As the trial court noted, both parties contributed the same amount of marital funds—$18,500 a year—toward their respective 401(k) accounts during the marriage. The fact that defendant’s account grew more than plaintiff’s account was simply because he had substantially more in his account before the parties were married. Under the circumstances of this case, by awarding each party their own appreciated 401(k) accounts, the trial court achieved a fair and equitable settlement.

ADVICE TO CLIENTS HAVING PROPERTY DIVISION ISSUES IN DIVORCE SETTLEMENTS

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