One of the most contentious issues in divorce is property division, especially when your spouse is asking to share inherited property. After all, the departed gave the property to you not your spouse. The answer begins in Michigan Compiled Laws 552.19 which authorizes a court to divide property acquired “by reason of the marriage“. However, the statute does not address if an inheritance received during a marriage is also considered “by reason of the marriage” under the statute.
The seminal Michigan cases on gifted and inherited property in a divorce are Lee v. Lee and Dart v. Dart.
In the Lee case the parties were married for 40 years. During the course of the marriage, the wife inherited $5,000 from her father. The trial court ruled that the inheritance was marital property and the Court of Appeals reversed the decision stating:
Plaintiff’s inheritance was her separate property and should have been distributed as part of the marital estate only if the remaining property was insufficient for the suitable support and maintenance of defendant, M.C.L. § 552.23, or if defendant had contributed to its acquisition, improvement, or accumulation. M.C.L. § 552.401Lee v. Lee at page 79.
In the Dart case, the husband inherited income from his father’s trust. The Michigan Court of Appeals stated:
Normally, property received by a married party as an inheritance, but kept separate from marital property, is deemed to be separate property not subject to distribution. Lee v. Lee, 191 Mich.App. 73, 477 N.W.2d 429 (1991). The trust income from the Dart Container Corporation was never marital property.Dart v. Dart at pg. 87
There are instances when separate property can become marital, such as when the inherited property was commingled with marital property, and the funds are no longer traceable to a separate source which is why lawyers advise clients to always place inherited monies in a separate bank account.
In sum, Michigan law provides that inherited property is separate property because it is not property acquired “by reason of the marriage“, rather, the property is acquired by inheritance. While there are instances when separate property can become marital, inherited property begins as separate property.
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By: Daniel Findling
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