Michigan is a no-fault divorce state which means the court will grant a divorce without a showing of fault-based grounds, even if the non-filing spouse does not want the divorce. The court is required to make an “equitable” division of marital property. In general, each spouse is entitled to 50 percent of the assets acquired throughout the marriage unless equity dictates otherwise. Long-term marriages raise various issues with property division, since the marriage may have produced pensions, retirement plans, various investment accounts, real estate and long-term investments.
Spousal Support and the New Tax Code
The most recent concerns involve spousal support. Under the new tax code and effective in 2019, spousal support will be taxed to the payer, not the payee as it has been done in the past. This means that there may be less money for both the payer and payee because the spousal support may be taxed at a higher tax bracket. This, of course, does not maximize the distribution available for the parties.
The Marital Home
The largest asset to a long-term marriage is often the marital home. In the current economy, the marital home may be an encumbrance to the settlement because there may be high levels of equity in the home. In addition, if you have been in a long term marriage and were the primary caregiver of your children, refinancing may be more difficult due to the lack of sufficient income. If awarded the home, you may be responsible for ongoing expenses associated with the house.
Qualified Domestic Relations Order
The division of pensions and retirement accounts also may require a “Qualified Domestic Relations Order” or QDRO. This is an order entered by the court contemporaneously with the judgment of the divorce to divide these types of accounts. A QDRO must be specific to the retirement plan in question, since each plan has different rules. A financial planner should be considered to manage the monies received pursuant to a QDRO to ensure growth long after the marriage has terminated.
Whether the property is titled in one spouse’s name over the other is not an indicator of the party whom will receive the property. In addition, the expenses of children over the age of 18 years of age will not be a consideration by the court. Generally, it does not matter if one spouse is paying for a child whom has reached the age of majority so the courts will not require parties to support child after the age of 18 years old.
It is recommended that you have knowledge of all of the property that has accrued throughout your marriage. It is also important to know all the sources of debt, such as credit cards or mortgages, because in Michigan each spouse will often be responsible for some of the debt, pursuant to a judgment of divorce.
Knowledge is always powerful to ensure that the assets of the long-term marriage are properly divided at the time of divorce.