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Marital and Separate: Gifts are Handled During Divorce Proceedings

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There is a gift box next to a lit candle with a picture in the background. Knowing the difference between marital and separate property isn’t easy. Typical courts will divide property into these categories before then deciding how to split property during divorce. How gifts will be dealt with can be even more complicated. This post goes through the difference between marital and separate property, gifts, and how Michigan courts divide property. 

Property Law: Marital and Separate 

As couples spend more time together, they end up owning more property together. When a couple decides to divorce, they typically have property including homes, cars, furniture, and sometimes a business. Property owned together or jointly is known as “marital property.” During the divorce proceedings, a judge will divide the marital property between the spouses.

Separate property includes all the individual assets or property either spouse had before entering into the marriage. Some assets gained during the marriage, such as an inheritance or gift, also count as separate property. 

Deciding the Fate of Gifts During Divorce

Now let’s focus on gifts. When one spouse receives a gift from someone other than the other spouse, that gift will most likely count as separate property and remain outside of the divorce proceedings. That individual must prove that the gift was meant just for them. A gift from one spouse to the other is most often considered to be marital property. Typically, the engagement ring counts as separate property due to being a gift brought to the marriage, whereas the wedding ring will count as marital property given during the marriage. 

As an additional note, gifts must be kept separate or they may become marital property. Let’s look at a financial gift as an example. If one spouse is given a financial gift separately but moves that gift into a joint account with their spouse, the gift will become marital property. The gift would remain as separate property if it stays in a separate account. 

Factors that Impact Property Distribution

Some states, known as community property states, consider the marital property to be owned equally by both spouses. In this case, the courts will typically divide that marital property up equally between both spouses. 

Other states, known as “equitable distribution” states, consider several factors when deciding the division of marital property. As of this blog’s publish date, Michigan is an equitable distribution state. In this case, the courts will consider the financial situation of both parties to make the fairest split of resources. Their financial situations may include separate property. The courts may also use property distribution to impact its decision surrounding alimony and whether or not to award it. The greater the amount given during the distribution, the lower the alimony rate will be. 

Separate property will typically not be divided during the divorce proceedings. 

An experienced divorce lawyer such as those at FasTrack Divorce can help you know your options and make the best choices during your divorce proceedings. Give us a call today at (248) 480-4800 to ask questions or schedule a consultation.