According to the U.S. Census Bureau, Michigan residents went through 20,812 divorces in 2022. Navigating a divorce is challenging on many levels, with financial concerns often at the forefront of the process. Understanding how to protect your wealth becomes important if you accumulate assets during your marriage.
Given Michigan’s stance on dividing marital property, ensuring a fair division requires a proactive approach and knowledge about the state’s laws and processes.
Difference between marital and separate property
The court divides marital property equitably during a divorce. This includes assets and debts acquired during the marriage. However, any inheritance, gifts to one spouse or assets owned before the marriage typically remain separate property. While they usually are not divided in a divorce, you need to keep clear records to prove their separate nature.
Maintain accurate financial records
Keeping detailed and accurate records of all financial transactions can make a huge difference. Ensure you have documentation of your income, property values and any other assets. This will help you provide clear evidence of the value and source of your assets.
Avoid commingling of assets
Keep your separate property, such as inheritance or personal gifts, in individual accounts. If you mix or commingle them with marital funds, they might become marital property. This makes it challenging to claim them as separate assets during a divorce.
Know the value of your assets
It is not enough to know what you own; you also need to understand the value of your assets. This includes real estate, businesses, stocks, retirement funds and other valuable items. Having a clear picture of your finances allows you to negotiate more effectively.
Consider a postnuptial agreement
If you did not sign a prenuptial agreement, you might think it is too late to protect your assets. However, Michigan recognizes postnuptial agreements. These contracts, created after marriage, outline how you will divide assets in the event of a divorce. Both parties must fully disclose their assets and agree voluntarily.
Remember, preparation and good record keeping is the key. In these challenging times, empower yourself with knowledge and strategies to make informed decisions about your financial future.
