A marriage can end in divorce, but it doesn’t mean your finances have to take a hit. If you know the law and are careful, you can escape your divorce without having to start over financially in addition to personally. The laws in each state are different, so pay attention to how things work where you live. This guide will walk you through what you need to know if you’re planning for a divorce in Michigan. Consider working with a financial advisor if you have questions about how to manage your personal situation during a divorce.
How to File for Divorce in Michigan
To get a divorce in Michigan, either spouse must have lived in the state for at least the last six months.
Grounds for a Divorce in Michigan
Michigan is a purely no-fault divorce state, so neither party has to prove any wrongdoing on the part of the other. The only legal grounds for divorce in the state is that the marriage broke down and there is no reasonable likelihood of reconciliation.
Process to Divorce
The process for a divorce in Michigan is pretty straightforward, but there are a series of steps you need to follow. First, one spouse will need to file a divorce complaint. This spouse becomes known legally as the plaintiff. The other spouse, legally known as the defendant, will then be served with papers. He or she then has 21 days to file an answer with the court. If there are children involved, the court may issue a temporary order regarding child support and custody.
Next, there is a discovery period where both parties interview witnesses, gather evidence and prepare their cases. After this is over, there will be negotiations between the two parties. The lawyers will work with each other to try to come to decisions on issues surrounding assets, alimony, child custody and more. If a settlement is doable, the parties will then present it to the judge.
If a settlement cannot be had, the case goes to trial. Both sides present testimony and evidence, after which the judge makes a legally binding decision pertaining to the relevant questions of the divorce.
How to Split Up Assets During a Divorce in Michigan
In Michigan, marital property is anything that was earned or acquired by either spouse during the marriage. This can include things like money, homes, cars and pension plans.
On the other hand, separate property, which is not part of the divorce settlement, is anything that was earned or obtained before the marriage. Exceptions to these rules are property received as a gift or inheritance. Likewise, property that’s part of a legal document, like a prenuptial agreement, is separate.
How to Divide Property in Michigan After a Divorce
Michigan is an equitable distribution state. In turn, a judge will split property between the spouses based on what’s considered to be fair. This is much different than a simple 50/50 split.
Factors the judge will consider include how long the marriage lasted, the contributions each spouse made to the total property, the age and health of the spouses, the needs and requirements of the spouses and the way each spouse conducted themselves during the marriage. Yes, this can include adultery.
How to Manage Child Support and Alimony Under Michigan Divorce Laws
There is a fairly complicated formula to determine child support payments in Michigan. Essentially, though, it takes the total income of each parent, the total time each spends parenting and the estimated cost of raising the children and determines how much the non-custodial parent should pay the custodial parent. It’s assumed that the custodial parent will be spending their portion of the cost in their time with the kids.
There are four types of alimony in Michigan: temporary, periodic, permanent and lump-sum. Temporary alimony is an order for one spouse to support the other during the divorce. This ends when the divorce is finalized.
Periodic alimony is paid by one spouse to the other for a predetermined period of time. This allows the supported spouse to become self-supporting, either by finding a job or getting the training they need.
Permanent alimony is payments from one spouse to the other until one dies. This is rare and is only for when one spouse can’t become self-supporting because of age or health concerns. Finally, there is lump-sum alimony, where one spouse pays the total reward upfront and that’s it.
There isn’t a formula for determining alimony payments. The judge can consider the needs and abilities of both parties, plus the behavior of each party during the marriage (again, including adultery) when deciding how much alimony one spouse must pay to the other.
401(k) and IRA and Divorce in Michigan
Retirement accounts may become part of the divorce settlement, and that may mean some money has to be taken out and transferred to the other spouse. Normally, taking money out of a 401(k) or other workplace retirement plan means facing taxes and penalties, but the judge can issue a qualified domestic relations order to avoid that. A QDRO is not needed for an IRA or other personal retirement plan, but the divorce judgement must carefully and specifically say what funds need to be removed to avoid taxes and fees.
Divorce and Estate Planning in Michigan
While married, you and your spouse may have had an estate plan. However, with your divorce, that plan likely needs some updating. First, your assets likely would have passed to your spouse had you died while married, but that now needs to change. If you have underage kids you want to receive your assets, you’ll need to set up a trust. Also, take the time to change your designated inheritor on all financial accounts, including retirement savings accounts.
In addition, make sure to change the designated inheritor for retirement accounts and any other financial holdings. If you filed any advance directives or powers of attorney during the marriage, make sure to change them unless you want your ex-spouse to make medical decisions for you.
Lastly, talk with your ex-spouse about plans for your children if both of you should die. You may already have a plan, but check in to make sure everyone is still on board.
Michigan is a no-fault divorce state, so it doesn’t matter if a specific incident leads to your divorce or not. It’s also an equitable distribution state, so marital property will be divided based on what is fair, not simply split up 50/50. Once all filings have been made, the two parties will have a chance to come to a settlement, but if one cannot be reached, there will be a trial where a judge makes a decision.
Financial Planning Tips
- A financial advisor can be a good idea no matter what the state of your marriage is. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Michigan has a flat income tax across the state, but some cities do charge an additional rate. Sales taxes are relatively low for the region, and there are no additional local sales taxes. Michigan has some of the highest average effective property taxes in the nation, though. Use SmartAsset’s Michigan tax calculator to estimate your state income taxes.
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