Commingled Property in a Divorce

Under Michigan law, only marital property is subject to division in a divorce. This means that only debts and assets that belong to the marriage will be distributed in a divorce proceeding. Given that Michigan law follows a theory of equitable distribution, the court divides property in a manner that is fair to both parties. Sometimes married spouses who are getting divorced can agree to a property settlement. Indeed, for some couples, it can be easy to come to an agreement about who wants to stay in the home, or even who wants to retain possession or ownership of a certain piece of property such as a motor vehicle or an artwork. However, even in situations where spouses have come to a general agreement about property division, significant complications can arise when separate and marital property has been commingled.

What does it mean for property to become commingled in a Michigan divorce?

Understanding How Property Becomes Commingled

In a Michigan divorce, only property that is classified as marital property can be subject to division. At first, this might sound like a basic and relatively easy premise to understand. If a married couple acquired property, other assets, or even debts during the marriage, then that property will be divisible during the divorce. Separate property, or property acquired prior to the marriage, inherited, or as a gift to only one spouse during the marriage, is not subject to division. But this underlying idea can become much more complex when separate property becomes mixed-or “commingled”-with marital property.

There are many different ways in which commingled property becomes an issue in a Michigan divorce, including but not limited to the following examples:

• Spouse #1 has savings from prior to the marriage and uses all or part of that savings to buy a home for the married couple or to invest in another piece of real estate, and both spouses then contribute to the mortgage payment;
• Spouse #1 has savings from prior to the marriage and uses all or part of that savings to invest in a business venture for the couple (which could be a business being run by one or both of the spouses, or a venture that the married couples wants to be a part of together);
• Spouse #2 receives a gift or inheritance during the marriage that is clearly meant only for Spouse #2 (and not for both parties), but Spouse #2 decides to use the gift or inheritance to comingle the inheritance into a joint bank account or use the inheritance to make repairs to the marital home; and/or
• Spouse #2 purchased a lot of stocks prior to the marriage and decides to sell them during the marriage and deposited the funds into a joint checking or savings account, to which both spouses add marital assets and withdraw them.

Distinguishing Separate and Marital Property

As you can see, situations involving commingled property can become very complicated. In some situations, depending upon the type of property and the manner in which it has been commingled, the court can distinguish separate property from marital property.

For example, in the scenario where Spouse #1 contributes separate property for the down payment on a house, the court may be able to determine a way to value the separate property investment. However, in other circumstances it may be more difficult to trace out the separate property.

Contact a Michigan Divorce Lawyer

Do you have questions about property division and commingled property? A Michigan divorce attorney can assist you. Contact the Law Offices of Michael A. Robbins to learn more about our services.