Two proposed pieces of Michigan legislation aim to create a dramatic shift in the distribution of assets for divorces where a spouse owns a business that prospers during the marriage. Presently, the law treats the growth or appreciation of a business occurring during the marriage as marital property, resulting in a 50/50 split between the spouses. The new law proposes a complete policy change and would generally classify appreciation in the business during the marriage as property of the spouse owning the business.
It would be an understatement to say the bills have “raised the eyebrows” of Michigan family law judges, attorneys and politicians. The bills propose a 180-degree turn in the policy of current Michigan property law, where profits obtained by each spouse during the marriage are considered marital property and divided equally if the marriage ends. However, the legislation only targets a particular situation where a spouse owns an appreciating business, leading many to speculate that the bills are being pushed by an invisible hand or hands that have a lot to lose – or gain – in an impending divorce.
Rep. John Walsh (R-Livonia) introduced the bills to legislature in May. According to the Detroit Free Press, the bills have been attempting to travel a low-profile route toward their ultimate goal of becoming law. As reported by the Free Press, Walsh denies that the bills cater to a particular individual and are simply representing good policy.
Regardless of who or what you believe, the proposed bills represent a monumental shift in classification of marital property when a spouse holds interest in a growing business. Most marriages derive their income from wages and salaries, but this proposed law would inexplicably treat marriages involving an appreciated business differently.
Source: Detroit Free Press, “A new Michigan divorce statute, tailored for one?” Brian Dickerson, June 22, 2011.