Passive Growth on Separate Property

7 January 2022
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Category: Blog
7 January 2022, Comments: 0

Robach v. Robach Unpublished opinion from the Michigan Court of Appeals (Docket # 352077)

This case involved a challenge of the Trial Court’s determination of what was marital and separate property.

In a divorce action, the trial court’s first task in dividing the marital estate is to first determine what property is considered marital property and what is considered separate property. Marital property is “that which is acquired or earned during the marriage,” and in contrast, separate property is best characterized as “that which is obtained or earned before the marriage.”

The general principle of law is that the marital estate is to be divided in a manner that each party takes with them their own separate property without the other party invading that property.

There are two exceptions to the “doctrine of non-invasion of separate estates.

MCL 552.23(1) allows for the invasion of the parties’ separate estates by the other party if, following the division of the marital estate, the division of the estate is such that the award is insufficient to allow for the suitable support and maintenance of either party.

Likewise, under MCL 552.401, invasion of a party’s separate estate is permitted if the other spouse “`contributed to the acquisition, improvement, or accumulation of the property.’

 

The Court of Appeals held that the trial court did not err in awarding defendant-ex-husband’s stock in a former employer to him as his separate property, or in finding that part of his pension was a separate asset not subject to division as part of the marital estate.

As these equity interests “were not payable to him ‘on account of service credit accrued’ by defendant during the parties’ marriage.” Rather, either purchased or was awarded them before the marriage. As to his 401(k) account, the court held that the trial court did not err in accepting the calculations offered by his CPA expert witness (C) and finding “that the $127,394 appreciated value of defendant’s premarital interest in his 401(k) account was his separate property.

SALIENT POINT

Premarital/Separate Property is not merely the value on the date of marriage BUT can include the passive appreciation of the asset.

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