Financial Decisions During Divorce in Michigan: What Not to Do
Quick answer: Once a divorce is filed in Michigan, the marital estate is generally valued as of the filing date. Financial decisions you make while the case is pending, such as withdrawing money, selling assets, paying certain debts, or making transfers, can be treated as dissipation of marital assets. A judge can add back those amounts to your share, which means acting unilaterally with marital funds often backfires.
Divorce is a financial event, and the decisions you make while the case is pending can have lasting consequences. Many people assume that money they earn or accounts they hold are theirs to manage freely. That assumption can be costly in a Michigan court.
Michigan courts look at the marital estate as of the date the complaint for divorce is filed. Transactions that reduce that estate, or that appear designed to deprive your spouse of their share, are scrutinized. A judge has the authority to add back assets that were dissipated, effectively penalizing the spouse who spent or moved them.
Here is what you need to understand before making any significant financial move.
What Is Dissipation of Marital Assets in Michigan?
Dissipation occurs when one spouse uses marital assets for a purpose unrelated to the marriage after the breakdown of the relationship has begun. Michigan courts have recognized dissipation in a range of situations, including:
● Withdrawing money from joint accounts and spending it personally
● Making large cash gifts to family members or friends
● Selling property at below-market value to a related party
● Paying off personal debts that were not shared marital debts
● Running up joint credit cards on personal expenses
When dissipation is found, the court can add the dissipated amount back to the dissipating spouse's share of the marital estate. This is often called an "add-back." The practical effect is that the other spouse receives a larger share of the remaining assets to make up for what was lost.
Dissipation is a legal finding, not automatic. The party claiming it must raise it and support it with evidence. But financial records in a divorce are subject to full disclosure, and large or unusual transactions are not difficult to spot.
Why Does the Filing Date Matter for Marital Finances?
Michigan courts generally value marital assets as of the date the complaint for divorce is filed. This is the legal snapshot of the marriage's finances. Assets that existed on that date are subject to division. Assets that were spent, transferred, or reduced after that date, and arguably before it if the breakdown had already begun, are subject to review.
This does not mean all financial activity stops. Normal living expenses continue. Mortgage payments, utilities, groceries, and other routine costs are not at issue. The line is between ordinary maintenance of the marital lifestyle and unilateral action to reduce what your spouse can receive.
The sooner you understand this distinction after a divorce is filed or anticipated, the better positioned you are to avoid a costly mistake.
Which Financial Moves Are Most Likely to Backfire?
Common financial actions and their risk level in a pending Michigan divorce:
| Financial Action | Risk Level | Why It Matters to the Court |
|---|---|---|
| Withdrawing large sums from joint accounts | High | Court treats assets as of the filing date; withdrawals may be characterized as dissipation |
| Paying off debt owed to a family member | High | Treated as dissipation if it reduces the marital estate before division |
| Selling marital property below market value | Very High | Judge can add back the fair market value to your share of the estate |
| Making large gifts or transfers | Very High | Fraudulent transfer rules apply; the asset is added back to the marital estate |
| Closing joint credit cards | Medium | Can strand the other spouse; judge may factor in economic hardship caused |
| Spending significantly more than usual | Medium | Lifestyle spending above the marital standard may be treated as dissipation |
| Paying normal household bills | Low | Routine expenses are generally not contested |
Emptying or draining joint accounts
This is one of the most common mistakes. Taking money from a joint account may feel justified, especially if you are worried your spouse will do it first. But large withdrawals during or immediately before a divorce proceeding are closely scrutinized. A court can characterize them as dissipation and reduce your share of other assets accordingly.
If you need access to funds to pay for living expenses or legal fees, there are procedural options, including requesting temporary support orders that address financial access during the pendency of the case.
Paying off debt to family members
Paying money owed to a parent, sibling, or close friend looks particularly suspicious in divorce proceedings. Courts are alert to the possibility that these payments are actually transfers designed to move assets out of the marital estate. If the debt is not well-documented, or if the timing coincides with the divorce, a judge may treat it as dissipation.
Selling assets below market value
Selling a car, a boat, real estate, or any other marital asset at a price below fair market value is one of the more serious financial missteps. The court can simply substitute the fair market value when calculating your share of the estate. You effectively take the loss while your spouse is compensated as though the sale never happened at the below-market price.
Making large gifts or transfers
Gifts to children (other than routine birthday or holiday gifts), transfers to LLCs or family trusts, or any other mechanism for moving marital assets out of your name before division is complete is subject to being reversed or added back. Michigan courts can look through transactions that appear designed to frustrate the equitable distribution process.
What Can You Do With Marital Finances During a Divorce?
Normal financial activity does not stop when a divorce is filed. You can and should continue to:
● Pay ongoing household and living expenses
● Make regular debt payments (mortgage, car, utilities, credit cards)
● Maintain your own employment and income
● Keep detailed records of all financial transactions
What you should avoid is any transaction that departs significantly from your marital lifestyle or that could be characterized as removing assets from the reach of the court.
In contested or high-asset divorces, courts sometimes enter automatic standing orders at the start of the case that explicitly prohibit certain financial moves by either party. Violating those orders carries serious consequences. If you are unsure whether a specific transaction is permitted, ask your attorney before acting.
Does Michigan Consider Fault or Conduct in Property Division?
Michigan is a no-fault divorce state, meaning marital misconduct is not required for a divorce and is not a primary driver of how property is divided. However, financial misconduct, including dissipation of marital assets, is a factor the court can consider.
The same equitable principles that govern spousal support also inform property division. A spouse who deliberately depletes marital assets to reduce the other's recovery is not acting in good faith, and Michigan courts have broad discretion to respond to that. For more on how courts approach spousal support decisions in this context, see What Is the Purpose of Spousal Support in Michigan.
What About Retirement Accounts and Investment Accounts?
Retirement accounts accumulated during the marriage are generally treated as marital property in Michigan, regardless of whose name they are in. Withdrawals from retirement accounts during a divorce carry a double risk: they may be treated as dissipation, and they often trigger taxes and penalties that reduce the asset's overall value.
Dividing retirement accounts properly requires a Qualified Domestic Relations Order (QDRO). This is a separate court order that directs the plan administrator to divide the account. Attempting to access or move retirement funds outside of this process is one of the more consequential financial mistakes a divorcing spouse can make. For cases involving significant retirement and investment holdings, see High-Asset Divorce in Michigan.
What Should You Do If You Suspect Your Spouse Is Moving Assets?
If you believe your spouse is dissipating or hiding marital assets, there are legal remedies. Your attorney can:
● Request a temporary restraining order to freeze financial accounts or prevent the transfer of specific assets
● Issue discovery requests for financial records, bank statements, and tax returns
● Engage a forensic accountant to trace transactions and identify irregularities
● Request the court impose sanctions or an add-back remedy for documented dissipation
The earlier you identify financial activity that concerns you, the more options are available. Courts take financial misconduct seriously in divorce proceedings, and documented evidence of dissipation can significantly affect both property division and, where applicable, the spousal support determination.
Why Timing Matters More Than Most People Expect
Most people going through a divorce focus on the legal process itself: filings, hearings, negotiations. Financial decisions often get made reactively, in response to stress or perceived unfairness, without understanding how those decisions will look to a judge.
The financial record of a marriage is transparent in a Michigan divorce. Bank statements, credit card records, wire transfers, and account histories are all subject to discovery. Transactions that seemed reasonable at the time may appear very different when examined in a courtroom months later.
The most practical advice is this: before making any significant financial move during a pending divorce, consult with your attorney. What feels like a reasonable or even necessary step may create a problem that costs far more to explain or remedy than the original transaction was worth.
Serving Clients in Oakland, Wayne, and Macomb Counties
Emily K. Catania is a Birmingham-based family law and litigation attorney who represents clients throughout Oakland, Wayne, and Macomb Counties in divorce and contested asset matters. If you have questions about your financial situation during a pending divorce, contact our office to schedule a consultation. Visit the Divorce Attorney page to learn more, or contact us directly to get started.
Related Reading
High-Asset Divorce in Michigan
Is There an Alimony Calculator for Michigan? What Those Online Tools Get Wrong
What Is the Purpose of Spousal Support in Michigan?
The Divorce Process in Oakland County, Michigan: Step by Step
Disclaimer: This blog post is for general informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship. Every case is unique, and outcomes depend on the specific facts and circumstances involved. If you have questions about divorce or marital finances in Michigan, consult a licensed Michigan attorney.
