Plaintiff, age 67 at the time of divorce, and defendant, age 59 at the time of divorce, were married for 23 years. The judgment of divorce provides for a division of property. Defendant appeals arguing that the trial court erred in determining the property division. Defendant argues that the trial court erred in finding that her entire IRA was marital property subject to division.
The focus of defendant's argument is on retirement assets she accumulated before the parties married that was invested in the disputed IRA. In 2007, defendant rolled over her retirement plan into the IRA. The funds in the IRA were eventually split into two accounts. This was done so that the parties could make withdrawals from the IRA to make mortgage payments on a new farmhouse that they were constructing on property they had earlier purchased from defendant's parents. In addition to the mortgage, construction of the new farmhouse was funded by the parties through withdrawals from their retirement accounts. Plaintiff testified that his retirement account was spent down entirely during the marriage both for the construction of the new farmhouse and for items such as fertilizer and feed used on the farm.
The trial court determined that because the parties had spent both of their respective retirement accounts on marital expenses but had preserved more of the principal in defendant's IRA, that that account should be considered marital property.
Each party to a divorce generally take[s] away from the marriage that party's own separate estate with no invasion by the other party. Separate property is property that is obtained or earned before the marriage. However, separate property brought into a marriage can lose its separate character and become marital property. This can occur when premarital funds are spent on a home later used and paid for by the married couple or when separate assets are commingled with martial property.
The trial court did not clearly err in finding that defendant's IRA, which was funded in part by some of her premarital retirement earnings, constituted marital property. Defendant's separate retirement funds lost their separate character when she combined them with funds earned during the marriage and then further combined them with plaintiff's retirement funds to pay for construction of a new marital home.
Appeal court affirms the trial court's ruling that defendant's entire IRA was marital property.
Are you facing a divorce in Michigan? Do you have questions about how your assets and your debts will be divided? In Michigan, marital assets - assets acquired during the marriage - are divided equitably during the divorce process. This does not mean that the property division will be equal, however. It is important you find a legal team that will guide you through the property division process, negotiating and fighting for the best possible outcome with your divorce decree or separation agreement.