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What is a Property Settlement Agreement?

When you start the divorce process, change is one of the first things that you'll hear about in the property agreement. This comprehensive document details exactly how the division of every piece of property will occur. 

It is also an important document for each spouse to have after the divorce decree has been finalized. It will give you all of the details of exactly how the divorce was decided, making it easier to enforce. That way, if there are any issues with the actual division of personal property, child custody, or anything else of the sort, you have the documents to refer back to. 

If you need help negotiating a property settlement agreement Clarity is here to help. Call us at (313) 513-1919 to schedule a free consultation with our divorce attorneys in Dearborn.

Overview of Property Division in a Michigan Divorce

In the state of Michigan, the division of assets during a divorce is typically put into two categories: marital property and separate property.

Marital property is any property, including assets and debts, that was acquired during the marriage and is considered the possession of both parties. One of the most common examples of marital property is a home that the couple purchased together during the marriage.

a gavel, 2 wedding rings, and a model home on a desk

In the event of a divorce, marital property, and the debt division is split between the two parties since it is considered equally owned by the two of them.

On the other hand, separate property is just that, separate. This includes any assets gained before the marriage, as well as specific assets during the marriage. For example, if one party's parent passes away during the marriage and receives an inheritance, that will typically only be considered the property of one party. 

How the Courts Decide Property Division in Divorce

In most circumstances, the Michigan government advocates for an equitable division of assets. However, it is not a community property state so this often means the actual division is not equal.

Instead of an equal distribution of assets, they focus on having an equitable distribution of assets. This means that each party might receive a slightly different amount to give both people an equal quality of life coming out of the marriage. 

Understanding Property Settlement Agreements

One of the most important documents in a divorce decree is the property settlement agreement or marital settlement agreement. The purpose of this document is to clearly outline how everything will be divided in the divorce and what each party will remain with. 

FAQ: How Much Does a Divorce Attorney Cost?

The exact components included in a divorce settlement agreement will vary depending on the divorce. It most commonly includes how the bank accounts and other financial assets will be divided. In the case of minor children, the marital settlement agreement can also include a child custody agreement. This can help to simplify the separation process and avoid having to go to child custody court after the fact.

Negotiating a Property Settlement Agreement

When negotiating a property settlement agreement you need to take the following into account:

Identifying and Valuing Marital Assets

When you begin to draft out the divorce settlement agreement you will need to identify and value all of the marital assets. An experienced attorney will be able to help you do this and connect you with appraisers to check the value of certain assets like your home. 

Negotiating Terms for Property Division

After the initial evaluations have been done, negotiations will begin between the two parties' attorneys. This is typically one of the longest stages of the divorce process as each attorney drafts up documents and sends them back and forth to one another until an agreement is reached.

In an uncontested divorce, this distribution of property is a much quicker process. If an agreement cannot be made, the divorce attorneys will have to take it to court and present the case to a judge. At that point, the judge will decide the case and how everything should be divided.

Key Considerations in a Property Settlement Agreement

The main factors that come into play when negotiating a property settlement during a divorce are:

Fairness and Equity in Property Division

One of the biggest issues that will be considered in the marital separation agreement is fairness and equity during the legal separation. An experienced family law attorney will be able to help you craft a financial settlement that considers both spouses. 

Tax Implications of Property Transfers

When it comes to tax issues, a tax-free transfer rule is generally followed. This means that with the initial transfer of property, there is no tax penalty. However, with certain assets, like real estate, at a certain point, you start to have to pay taxes for that asset. 

a gavel splitting a model home in two on a table

This is why it is important to have an equitable divorce property settlement agreement, to ensure that no one spouse ends up walking away from the divorce judgment and having to pay significantly more tax-wise. 

Benefits of a Property Settlement Agreement

Benefits of negotiating a property settlement through divorce mediation include:

Control Over the Outcome of the Property Division

If you can come to a successful property settlement agreement, this provides many benefits to both parties. First and foremost, this allows both parties to have quite a bit more control over the property distribution without having to rely on the judge to make a fair decision.

Avoidance of Costly and Time-Consuming Litigation

The second benefit of a divorce agreement is that it will help to avoid the costly and time-consuming litigation that comes with a contested divorce. This is why an uncontested divorce agreement is typically considered to be the best-case scenario in any divorce case.

Enforcing a Property Settlement Agreement

For the marriage settlement agreement to be a binding contract working with a family law attorney is crucial. Experienced divorce attorneys understand all of the ins and outs of writing these agreements and will ensure that there are no loopholes in the contract.

Learn More: How to File for a Divorce in Michigan

In the case of a breach of the agreement, there are several ways for your legal counsel to support you. Before escalating things, a knowledgeable attorney will try to mediate the situation and work with both parties. If necessary, your legal team can help you file a lawsuit against the party breaching the contract to ensure that you receive all the benefits you are entitled to. 

We Can Help Negotiate a Fair Property Settlement Agreement

When you are entering into a divorce process, crafting the property separation agreement will be one of the most crucial steps of the entire process. This is what will allow you to have the most control over the final judgment of divorce. 

If you are facing a divorce and need an experienced family law attorney in Dearborn, look no further than Clarity Family Law. Our team will help you craft an impeccably designed marriage settlement agreement to ensure that a fair and equitable separation is achieved.

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