Now Accepting New Clients!

FAMILY LAW 10: Marital estate not divided 50/50.

Plaintiff and defendant were both previously married and divorced. They married in February 2013. The marriage had difficulties from the very start, and plaintiff filed for divorce in May 2015. Plaintiff and defendant did not have children together. The primary issues for trial involved whether and to what extent to include various assets in the marital estate.

The evidence showed that plaintiff came to the marriage with a net worth of between $5,000 and $10,000, even though she owned a rental home. She previously worked in real estate but quit her job during the marriage and, with defendant’s help, purchased a franchise. Defendant had significant premarital assets. He owned a company. While the parties were still dating, defendant also purchased a home that the parties resided in throughout the marriage. At trial, the parties disputed the amount that the company’s value increased during the marriage and whether the home had increased in value.

The trial court held a bench trial on the disputed issues over two days. The parties each called an expert to testify about the company’s value.  The trial court found that the company’s value increased by $400,000 during the term of the marriage, but did not include the amount in the marital estate. The court found that plaintiff’s franchise was worth $78,000 because that was the number both parties selected, and it was the amount remaining on the loan used to finance the purchase. The trial court also found that the home had not increased in value during the term of the marriage. The trial court also divided the parties’ retirement accounts. It found that the total value of the marital estate was $598,613.

Although the trial court recognized that a marital estate will normally be divided 50/50, it elected to award 60% to defendant and 40% to plaintiff. It explained that the marriage was short, and the parties did not have children. Additionally, defendant funded 95% or more of the marriage. It specifically stated that there was no evidence that plaintiff provided assistance to defendant’s business or really provided much assistance to the marriage.  The court calculated plaintiff’s share of the estate to be $239,446, but reduced that amount by the value of the franchise, which was $78,000. The remaining award was $161,446. It indicated that defendant would have to pay that amount to plaintiff.

There was some evidence that plaintiff directly supported defendant’s efforts to run his business. She testified that she helped organize the Christmas party for the employees, attended trade shows, and offered advice to defendant on various matters; however, the trial court found that she did not directly contribute to the company.

In analyzing whether a spouse has contributed to the acquisition, improvement, or accumulation of a separate asset, Michigan courts have long recognized that a spouse does not have to make a direct contribution before a court will be justified in invading the separate asset.

It is true that property earned by one spouse during the term of the marriage is presumed to be marital property.  But it is not clear that the revenue generated by an entity that is wholly owned by one spouse as his or her separate property invariably constitutes earnings of that spouse. Michigan courts respect the separate existence of an artificial entity, even when the entity is solely owned by an individual. Courts will only disregard an entity’s separate existence when the owner has misused the separate existence of the entity and his or her misuse has harmed another. Absent circumstances involving the misuse of the corporate form, the trial court would usually be required to respect the company’s separate existence and treat the earnings retained as its separate property.

When presented with a dispute over retained earnings, trial courts must determine on a case-by-case basis whether the earnings retained by the entity should be treated as marital income for purposes of dividing the marital estate.

Are you facing a divorce in Michigan? Do you have questions about how your assets and your debts will be divided?  Brad Aldrich has more than 19 years of experience and, together his legal team, they will guide you through the property division process, negotiating and fighting for the best possible outcome with your divorce decree or separation agreement.

Contact Aldrich Legal Services

FSBO: 3 Tips to Help Effectively Sell Your Home

Many homeowners are taking real estate matters into their own hands, especially when it comes to their own homes. Some of the most difficult tasks FSBO sellers encounter are selling their home at the right price, understanding paperwork and selling...

How Is Debt Split Up In A Divorce?

For some, debt is inevitable. Many individuals have some form of debt whether it’s credit card debt or student loans. You and your spouse may have accumulated debt over the years and this raises a huge question. How is debt split up in a...

What Are Some Post Legal Divorce Issues?

Once a divorce is finalized, there still may be a few legal issues that can happen after the divorce proceeding. It’s even possible that new issues can arise after the divorce. In either event, a divorce lawyer can help guide you through these...

For Sale by Owner: Do You Need an Attorney?

  For sale by owner (FSBO) homes can be a daunting task. However, if you want to do it correctly and smoothly, it’s best done with some assistance from a real estate lawyer. A real estate attorney has the knowledge and experience to...

Michigan Marijuana Statutes

In the state of Michigan, the possession of marijuana is illegal unless you have a medical condition that is debilitating. Below we discuss the marijuana statutes in Michigan. Medical Marijuana The Michigan Medical Marijuana Act states that...

The Most Common Reasons for Real Estate Litigation

Real estate litigation can happen to anyone, from buyers and sellers to real estate agents, there’s always a potential for a lawsuit. With a lot of money on the line, it’s crucial to have an experienced attorney who has a great...

Refusing A Blood Alcohol Test in Michigan

In the state of Michigan, the law requires you to take either a blood, breath or urine test if arrested for an OWI. Michigan has an “implied consent” law which states that if someone lawfully arrested by an officer who has probable cause...

Do Background Checks Show Misdemeanors?

  Misdemeanors are often considered a less serious criminal offense compared to their felony counterpart. Common misdemeanors include reckless driving, petty theft, public intoxication, trespassing and more. Although misdemeanors don’t...

Don't let a bad decision, unfair contract, or a messy divorce get in the way of a promising future!
Contact the experienced team at Aldrich Legal Services today to schedule your free initial
and secure reliable and trustworthy representation today!
Get the Help You Need From a Team You Can Truly Count On: (734) 404-3000