Michigan is known as an equitable distribution state for the purposes of a divorce. This means that when dividing assets, the split does not need to be exactly even for both parties but needs only to be what is considered fair to both given the circumstances at hand. It is also important to remember that property division does not simply include assets but also liabilities. When determining which spouse will end up with what asset or what debt, the courts must also identify what is marital property and marital debt and what is separate property or separate debt.
A current article in the media highlights some of the nuances related to the determination of marital versus non-marital property. Student loans are one debt that may be considered either depending on a number of factors. For example, did the loans lead to a degree and ultimate profession that provided well financially for both spouses? If it can be shown that both parties benefited from the education, the loans used to pay for that education may be considered to be marital debt.
Whether or not the loan funds were used to pay for school costs directly or for general living expenses can also affect the determination as the latter situation would have helped both spouses. Tax implications and both spouses’ individual earning potentials are additional factors that would be taken into consideration to ensure an equitable division of the marital estate.
There are many nuances that can arise during a divorce. Whether regarding student loans, retirement accounts, bank accounts or something else, getting help from an attorney might be a helpful way to work through the settlement process.
Source: Forbes, “Are Student Loans Incurred During The Marriage Considered Marital Debt?,” Jeff Landers, December 17, 2013