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How could a weak market affect your divorce settlement?

When you get divorced, your future depends upon a fair property settlement. In turn, that settlement hinges on many factors, including proper timing.

That may be why, as stock markets plummeted, the Daily Mail reported a sharp rise in UK divorce filings. Experts say the uptick doesn’t necessarily mean that people are getting divorced because of the bad markets. Instead, they believe the divorce rate surged because so many people who had been thinking about divorce saw that the time was right. Could this hold true for Michigan, as well?

The nature of equitable may change with time

In Michigan, you don’t need to split your separate assets, but the courts will aim for an equitable division of all your marital assets. Importantly, this doesn’t mean an “equal” division, but one commonly based on seven factors:

  • The length of your marriage
  • Each party’s needs
  • Your children’s needs
  • How much each party contributed to the marital estate
  • Your earning power
  • Each party’s conduct and contribution to the marital relationship

A downward turn in the market likely won’t affect most of these factors, although it may change how the court views your contribution to the marital estate and your earning power. More importantly, a bad market may shrink your marital estate. Especially if you have a more complicated estate that involves business ownership, insurance policies, retirement funds, a stock portfolio and other investments. Many of these assets may depreciate as the market takes a dive.

This is important because the court works with an understanding of the marital estate that’s set at a specific time. If you get divorced while your assets are devalued, you might structure the divorce to your advantage. 

Everything is connected

Your divorce can affect nearly every part of your life, and nearly everything in your life can affect your divorce. The more complicated your estate, the more you want to take a strategic approach. You want to make sure you explore every angle and every option. You want to understand your tax consequences, and you want to know how different approaches may affect your outcome.

In the end, the timing of your divorce may play as much a role in getting you a good settlement as the factors the court chooses to review.