In a divorce case, Michigan Courts have the discretion to treat inherited property acquired during the marriage as either marital or separate property. When inherited property has been commingled with marital property or used jointly by the parties, or if the spouse of the one who received the inheritance has contributed to the acquisition, improvement, or accumulation, the courts will generally view the property as marital property and thus subject to division. Ross v Ross, 24 Mich App 19 (1970). Zimmers v Zimmers, 346 Mich 28 (1956).
However, if the inheritance received by a married party is kept separate from the marital property, the courts generally deem it to be separate property not subject to division. Lee vs. Lee, 191 MichApp 73 (1991). Generally, Courts hold that the longer the marriage, the more likely the property will be considered to be joint and thus subject to division. Ross v Ross, 24 Mich App 19 (1970).
Inherited property that is held separately from marital property is generally considered separate property and generally should not be invaded. Dart v Dart, 460 Mich 573, 584-585 (1997). However, this general rule is subject to certain exceptions, including circumstances in which marital assets are insufficient for suitable support and maintenance, MCL 552.23(1), and when the non-inheriting spouse made a contribution to the acquisition, improvement, or accumulation of property, MCL 552.401. The court may also award one of the parties part of an inheritance if both parties reasonably anticipated that an inheritance would be available for retirement purposes and it was necessary to sustain the other’s standard of living during retirement and if the anticipation that the inheritance would fund a retirement caused one to not create a nest egg for retirement. Lowrie vs. Lowrie (Mich App, 2008).
There are no mathematical rules for determining how an inheritance is to be divided or if it is to be treated as marital property. The Michigan Supreme Court has approved a trial court decision that took the $10,000 net value of the home, stated that the husband should have 1/2 of it, then charged against his half the value of his car, some stock and a $1,200 inheritance the wife had received three years earlier and that she has partly spent on the home and partly on living expenses. Johnson vs. Johnson, 346 Mich. 418 (1956).
Property that is inherited or gifted after a divorce case has been filed is unusually not deemed to be subject to division as it is hard for the spouse to argue that they contributed to the acquisition, improvement or accumulation of the inheritance as it was acquired after the divorce proceedings. Davey v Davey, 106 Mich App 579 (1981). A post-divorce inheritance of gift may, however, be found significant to the beneficiary spouse’s ability to pay support.