How is Inheritance Handled in a Michigan Divorce?

Divorce proceedings raise many questions about asset division, and inheritance debates can add fuel to already heated disputes. The treatment of inherited assets depends largely on how those assets were managed during the marriage, a distinction that can significantly influence your financial future.

Here is what you need to know about inheritance in Michigan divorce:

• Inheritance typically remains separate property if it is kept isolated from marital assets
• Commingling can convert inheritance into marital property that is subject to division
• Courts may award separate property to the other spouse if that spouse’s marital share is insufficient for support
• Documentation is important for protecting inherited assets

Understanding these nuances can help protect your financial interests during property division. At Robbins & Licavoli, PLLC, our team has experience with the division of complex assets and can help you protect your property during divorce.

Separate Property vs. Marital Property: The Foundation

Michigan law distinguishes between two categories of assets in divorce: separate property and marital property. This classification determines whether assets are subject to division during divorce proceedings, as only marital property is considered for division.

Separate property can include:

• Assets owned before marriage
• Inheritances received by one spouse
• Gifts given specifically to one spouse

Marital property can include:

• Assets acquired during the marriage
• Income earned by either spouse
• Property purchased with marital funds
• Retirement benefits accrued during marriage

Inheritance typically falls into the separate property category. However, this classification is not always permanent, as actions taken during the marriage can change the status of an inheritance.

When Inheritance Becomes Marital Property

The way inheritance is treated during the marriage often determines its status in divorce. Several actions can cause separate inheritance to become marital property, such as:

• Commingling with marital assets: Depositing inherited money into joint accounts or using it for household expenses typically converts it to marital property.
• Joint improvements: Using inheritance funds to improve the marital home or other jointly-owned property can make those funds subject to division.
• Regular marital use: Consistently using inherited property for marital purposes may convert it to marital property.

Michigan’s Approach to Separate Property Division

Michigan follows an equitable distribution model, meaning courts divide marital property fairly, though not necessarily equally. However, Michigan law also has a unique provision regarding separate property.

Even when inheritance remains classified as separate property, courts may still award part of it to the other spouse under specific circumstances. In particular, this can occur when the non-inheriting spouse’s share of marital property is considered not enough to provide adequate support.

Protecting Your Inheritance Rights

There are several strategies you may consider to help preserve an inheritance as separate property.

• Maintain separate accounts: Keep inherited funds in accounts that have only your name.
• Document the source: Keep records that show the origin of the inheritance and any transactions involving those funds.
• Avoid commingling: Avoid using inherited money for joint expenses or improvements to marital property.
• Consider prenuptial agreements: These documents can specify how inheritance will be treated in the event of a divorce.
• Seek legal guidance: An experienced lawyer can help you address inheritance issues before they become problematic.

Get Professional Legal Help with Property Division

Inheritance issues in divorce can become complicated quickly, especially when years of marriage have made it harder to distinguish between separate and marital property. The financial stakes of property division make professional legal guidance essential to protecting your interests.

At Robbins & Licavoli, PLLC, our experienced property division lawyers in Birmingham, MI, understand the nuances of Michigan divorce law. We help clients navigate difficult asset division issues and work to ensure their rights are protected throughout the divorce process. Contact our team today to discuss your situation and learn how we can help protect your assets during property division proceedings.