For most divorcing couples, two questions cause more stress than almost anything else: Who keeps the house? And what happens to our retirement savings?
These concerns make sense. Your home represents stability, memories, and often your largest investment. Retirement accounts represent your future security. When a marriage ends, figuring out how to divide these assets fairly while protecting both spouses’ interests requires understanding how Michigan law actually works.
Michigan follows “equitable distribution” principles—meaning property is divided fairly, but not necessarily equally. This guide explains what that means in practice, how courts distinguish marital property from separate property, and what options exist for handling your home, retirement accounts, and debts.
Equitable Distribution: Fair Doesn’t Always Mean 50/50
Michigan is an equitable distribution state, not a community property state. Under MCL 552.19 and MCL 552.401, courts divide marital property based on what’s fair given your specific circumstances—which may or may not result in a 50/50 split.
Factors courts consider when determining equitable distribution include:
- The duration of the marriage—longer marriages typically result in more equal division, while shorter marriages may see each spouse retain more of what they brought in or earned.
- Each spouse’s contribution to the marital estate, including both financial contributions (income, investments) and non-financial contributions (homemaking, childcare, supporting the other spouse’s career).
- Each spouse’s age, health, and earning capacity—a spouse with limited ability to rebuild assets may receive a larger share.
- The parties’ station in life and circumstances, including needs and current financial situations.
- Each spouse’s fault or past conduct, though this factor typically carries limited weight except in cases involving financial misconduct or dissipation of assets. Whether property was acquired before the marriage or through inheritance or gift.
What this means practically: Don’t assume you’re automatically entitled to half of everything, and don’t assume your spouse is either. Courts have significant discretion to craft property divisions that account for each family’s unique circumstances.
Marital Property vs. Separate Property: A Critical Distinction
Not everything you own is subject to division. Michigan distinguishes between marital property (divisible) and separate property (generally not divisible).
What Counts as Marital Property
Marital property includes most assets acquired during the marriage, regardless of whose name is on the title. This encompasses:
- Income earned by either spouse during the marriage,
- the marital home (if purchased during the marriage),
- retirement contributions made during the marriage,
- vehicles, furniture, and other property purchased during the marriage,
- investment accounts funded during the marriage, and
- business interests developed during the marriage.
The underlying principle is that marriage is a partnership. Both spouses contribute to the household—whether through earning income or managing the home and family—and both share in the assets accumulated during that partnership.
What Counts as Separate Property
Separate property generally includes:
- Assets owned by either spouse before the marriage,
- inheritances received by one spouse (even during the marriage),
- gifts given specifically to one spouse, and
- property excluded by valid prenuptial or postnuptial agreement.
Separate property typically remains with the spouse who owns it. However, this isn’t absolute—courts have discretion to invade separate property when equity requires it, particularly in long marriages where spouses’ assets have become thoroughly intertwined.
The Commingling Problem
Here’s where things get complicated. Separate property can lose its protected status through “commingling”—mixing it with marital assets in ways that make it difficult to trace.
Common commingling scenarios:
- You inherited $100,000 and deposited it into a joint bank account used for household expenses. That inheritance may now be considered marital property—or at least partially so.
- You owned a home before marriage, but both spouses contributed to mortgage payments and improvements during the marriage. The home’s appreciation during the marriage may be marital property even if the original equity was separate.
- You received a gift from your parents and used it as a down payment on a jointly-titled vacation property. The gift may have transformed into marital property.
Protecting separate property:
If you want to keep an inheritance or pre-marital asset separate, maintain clear documentation, keep it in a separate account, and avoid using marital funds to maintain or improve it. Consult with an attorney about your specific situation.
Options for the Marital Home
The family home is often the most emotionally charged asset. Beyond financial value, it represents stability—especially when children are involved. Michigan courts and divorcing spouses typically consider three main options.
Option 1: One Spouse Buys Out the Other
The most common solution involves one spouse keeping the house and compensating the other for their share of the equity.
How it works: Determine the home’s current market value (typically through appraisal), subtract the mortgage balance to find the equity, and divide that equity according to your settlement terms. The keeping spouse either pays the other spouse their share directly or receives less of other marital assets to offset the buyout.
Example: Home value is $400,000 with a $200,000 mortgage, leaving $200,000 in equity. If dividing equity equally, the keeping spouse owes the other $100,000—either in cash, by taking on more debt, or by receiving $100,000 less in retirement accounts or other assets.
Considerations: Can the keeping spouse afford the mortgage alone? Will they need to refinance to remove the other spouse from the loan? Is the emotional attachment to the house worth potentially receiving less of other assets?
Option 2: Sell the House and Split Proceeds
Selling allows both spouses to walk away cleanly and divide the actual proceeds.
Benefits: Both spouses get liquid assets rather than illiquid home equity. Neither remains financially tied to the other through the property. Division is straightforward once the house sells.
Drawbacks: Children may need to move and change schools. Transaction costs (realtor fees, closing costs) reduce the total value to divide. The current housing market affects timing and proceeds.
When selling makes sense: Neither spouse can afford the home alone, both spouses want a clean break, or the home carries more emotional baggage than benefit.
Option 3: Deferred Sale or Co-Ownership
Some couples agree to delay selling—often until children finish school or the market improves.
How it works: One spouse (typically the one with primary custody) remains in the home. Both spouses remain on the mortgage and title. The home is sold at a specified future date or triggering event, with proceeds divided according to the agreement.
Risks: Both spouses remain financially entangled. If the resident spouse fails to maintain the property or pay the mortgage, both credit scores suffer. Disputes can arise over maintenance costs, improvements, and sale timing.
When deferred sale works: Parents prioritize keeping children in their home and school during the transition. Both spouses are cooperative and trustworthy. Clear terms govern expenses, maintenance, and sale conditions.
Retirement Accounts, Pensions, and QDROs
Retirement assets are often the second-largest marital asset after the home—and they require special handling.
The basic principle: Retirement contributions made during the marriage are generally marital property subject to division, even if only one spouse’s name is on the account. Contributions made before marriage or after separation may be separate property.
Types of Retirement Assets
401(k)s and similar defined contribution plans have a specific account balance that can be divided. You’ll need a Qualified Domestic Relations Order (QDRO) to direct the plan administrator to transfer a portion to the non-employee spouse.
Pensions and defined benefit plans promise future payments rather than having a current account balance. Division is more complex and may involve present-value calculations or dividing future payments when received.
IRAs are divided through a transfer incident to divorce rather than a QDRO. Proper handling avoids early withdrawal penalties and tax consequences.
The QDRO Process
A QDRO is a separate court order—apart from your divorce judgment—that directs a retirement plan to divide the account. Without a properly drafted QDRO, the plan administrator won’t release funds to the non-employee spouse.
Critical points about QDROs:
Your divorce judgment doesn’t automatically divide retirement accounts—you need the separate QDRO.
QDROs must comply with both Michigan law and the specific plan’s requirements. Generic forms often fail.
Delays can be costly. Until the QDRO is processed, the non-employee spouse doesn’t have protected rights to their share.
Work with an attorney experienced in QDROs to ensure proper drafting and processing.
Avoiding Tax Mistakes
Retirement account division has significant tax implications. Transferring funds through proper legal channels (QDRO for 401(k)s, transfer incident to divorce for IRAs) avoids immediate taxation.
Common mistakes: Taking a direct distribution instead of a transfer, failing to roll transferred funds into an appropriate account, and miscalculating after-tax values when comparing retirement assets to other property.
A $100,000 401(k) isn’t equivalent to $100,000 in a savings account—the retirement account will be taxed upon withdrawal. Consider after-tax values when negotiating property division.
Debt Division and Protecting Your Credit
Divorce divides debts as well as assets. Understanding how debt allocation works protects your financial future.
How Michigan Divides Debt
Generally, debts incurred during the marriage for marital purposes are divided equitably between spouses. This includes mortgages, car loans, credit cards used for household expenses, and similar obligations.
Debts one spouse incurred for non-marital purposes—gambling debts, loans to fund an affair, excessive personal spending—may be assigned more heavily to that spouse.
The Creditor Problem
Here’s something critical to understand: Your divorce judgment doesn’t bind creditors. If both spouses’ names are on a debt, the creditor can pursue either spouse regardless of what your divorce decree says.
Example: Your divorce assigns the $20,000 credit card balance to your ex-spouse. Your ex stops paying. The credit card company can still come after you—your name is on the account. Your recourse is against your ex-spouse, not the creditor.
Protecting yourself: Where possible, pay off joint debts before or during divorce. Refinance joint obligations into the responsible spouse’s name alone. Close joint accounts to prevent further charges. Monitor your credit report after divorce.
Special Issues: High-Asset and Business Owner Divorces
Some divorces involve complexity beyond typical property division.
Business ownership raises valuation challenges. What is the business worth? How much of that value is marital property? Is the value dependent on one spouse’s ongoing involvement? These questions often require forensic accountants and business valuation experts.
Stock options, RSUs, and executive compensation require careful analysis. Some may be marital property; some may be separate. Vesting schedules and tax implications add complexity.
Multiple properties, investment portfolios, and complex financial structures require thorough discovery and often expert assistance to ensure accurate valuation and fair division.
If your divorce involves significant assets, professional practices, or business interests, working with attorneys and financial experts experienced in high-net-worth divorce is essential to protecting your interests.
Frequently Asked Questions About Michigan Property Division
Who gets the house in a Michigan divorce?
There’s no automatic rule—courts consider multiple factors including each spouse’s financial ability to maintain the home, whether children are involved, and overall property division fairness. Often the spouse with primary custody of children keeps the home, but this isn’t guaranteed. Many couples choose to sell and split proceeds rather than one spouse keeping the house.
Is Michigan a 50/50 divorce state?
No. Michigan is an equitable distribution state, meaning property is divided fairly but not necessarily equally. Courts consider factors like marriage length, each spouse’s contributions, earning capacity, and circumstances. Many divorces result in roughly equal division, but courts have discretion to divide property unequally when fairness requires it.
Can I keep my inheritance in a Michigan divorce?
Generally yes, if you kept it separate. Inheritances received by one spouse are typically separate property. However, if you commingled the inheritance with marital assets—depositing it in a joint account, using it to buy jointly-titled property, or mixing it with marital funds—it may lose its protected status. Documentation and keeping inherited assets separate are key to protection.
How are retirement accounts divided in Michigan divorce?
Retirement contributions made during the marriage are generally marital property divided equitably between spouses. Division requires proper legal mechanisms—a QDRO for 401(k)s and similar plans, or a transfer incident to divorce for IRAs. Working with an attorney experienced in retirement division helps avoid costly tax mistakes and ensures your share is properly secured.
Am I responsible for my spouse’s debt after divorce?
Possibly, even if your divorce decree assigns it to your spouse. Creditors aren’t bound by your divorce judgment—if your name is on the debt, they can pursue you. Your divorce decree gives you recourse against your ex-spouse, but collecting from an uncooperative ex can be difficult. Paying off or refinancing joint debts during divorce provides better protection.
Take the Next Step: Protect Your Share of Marital Property
Property division shapes your financial future for years to come. Understanding your rights and options helps you negotiate effectively and avoid costly mistakes.
At Boroja, Bernier & Associates, we help Michigan residents navigate property division with practical expertise and attention to detail. Our divorce attorneys ensure assets are properly valued, separate property is protected, and division is truly equitable. With offices in Shelby Township, Troy, Ann Arbor, and Lansing, we serve families throughout Macomb County, Oakland County, Wayne County, and Southeast Michigan.
To schedule a consultation with the Michigan divorce attorneys at Boroja, Bernier & Associates, call our law offices at (58) 991-7611. We’ll help you understand what you’re entitled to and develop a strategy that protects your financial future.
