Divorce; Whether property was part of the marital estate or separate; Hodge v. Parks; Cunningham v. Cunningham; Distinguishing Gates v. Gates; Claim that the trial court erroneously believed that Michigan no longer recognizes separate property in a divorce proceeding; Valuation & division of the marital estate; Woodington v. Shokoohi; Attorney fees; Richards v. Richards; MCR 3.206(C); Veterans’ Administration (VA)

The court held that the trial court did not err by treating property formerly belonging to the defendant-ex-wife’s mother (L) as part of the marital estate instead of her separate property, and did not clearly err in its valuation of particular marital assets. Further, its overall distribution of the marital estate was fair and equitable in light of the parties’ circumstances, and it acted within its discretion by holding them responsible for their respective attorney fees. Thus, the court affirmed the divorce judgment. Defendant argued that the trial court erred in determining that two rental properties—which the parties acquired using funds received from L, as well as liquid assets of approximately $200,000 that originally belonged to L—were marital assets as opposed to defendant’s separate property. The trial court found that she had admitted to depositing approximately $390,000 received from L “into joint marital accounts and then using some of that money to purchase the rental properties.” It further found that the plaintiff-ex-husband had contributed to the appreciation of the rental properties by maintaining and repairing them. It rejected defendant’s claim that these assets were her separate property, finding that she “intentionally committed [L’s] money to the marital estate and then changed her mind when the divorce was a reality.” Defendant did not dispute that the bank account funds that she now sought as her separate property were placed into the parties’ joint accounts. The trial court found that the money was transferred to the parties so that L could qualify for VA benefits. Defendant maintained that the money was held in trust for L. “But apart from the fact that the funds were transferred into accounts in the parties’ joint names,” L could “not qualify for VA benefits and at the same time retain those assets for her support.” Because L had to relinquish those assets before her death “to qualify for VA benefits, the trial court did not err in rejecting defendant’s argument that there was no intent to transfer the assets to the parties before” L died. Their conduct in placing the money in the joint accounts, and in using some of it to purchase investment property that was managed by plaintiff, was also inconsistent with treating the property as defendant’s separate property. This case was factually distinguishable from Gates. Also, viewing the trial court’s comments in context, there was no merit to defendant’s argument that it “mistakenly believed that there was no longer a distinction between marital and separate property in Michigan.”