In an unpublished opinion by the Michigan Court of Appeals (Docket # 366319), the Defendant appealed the property division ordered in the trial court’s judgment of divorce. The Michigan Court of Appeals reversed the trial court’s finding that the increase in value of the marital home that occurred during the marriage was plaintiff’s separate property.
Plaintiff claimed that the Parties had an premarital agreement regarding their property, including the home she had prior to the marriage. Plaintiff also claimed that she was unaware of Defendant premarital debt and had she known, she would not have entered the marriage. During the marriage, the parties kept all of their financial affairs separate
The trial court found that the verbal agreement was a condition prior to the marriage, however, the trial court also concluded that it did not have the authority to enforce an oral premarital agreement. Nevertheless, the trial court found that the parties never intended a true marriage in the sense of the business of a marriage and found defendant at fault for the breakdown of the marital relationship. The trial court found that the marital residence was not commingled and remained plaintiff’s separate property.
❏ The Court of Appeals rejected Defendant’s argument that the trial court erred by finding him at fault for the breakdown of the marital relationship.
❏ The Ct of Appeals rejected Defendant’s argument that the trial court erred by rendering a 70-30 division of plaintiff’s retirement account.
❏ The Ct of Appeals agreed with Defendant’s argument that the trial court erred by finding that the marital residence was plaintiff’s separate property and any appreciation in value did not belong to the marital estate.
The Court of Appeals findings was as follows:
Generally speaking, Marital property is property that was acquired or earned by the parties during the marriage, and, with certain exceptions, separate property is property that the parties obtained or earned before the marriage.
However, classification asset is more complicated with respect to a marital home that was separately purchased by one party prior to the marriage. The sharing and maintenance of a marital home affords both spouses an interest in any increase in its value (whether by equity payments or appreciation) over the term of a marriage. However, the down payment, the equity built up before the parties’ marriage, and any appreciation that occurred before the parties’ marriage should be considered separate estate.
The Court of Appeals found that the trial court erred by finding that the entire value of the marital home was plaintiff’s separate property and was due to the Court’s misunderstanding of how to classify marital or separate property in the absence of an enforceable premarital agreement.
Final Point, the Court of Appeals telegraphed the appropriate way to have accomplished its objective by stating that there may have been equitable consideration with respect to the property distribution.
The Defendant has filed an Application for leave to the Michigan Supreme Court (Docket # 167752)