Defendant entitled to a portion of the increased value of the home inherited by the plaintiff.

In Piccard v Piccard, Unpub Per Curiam Opin (#316582, 11/17/2015) the Court of Appeals held that defendant was entitled to a portion of the increased value of the home inherited by the plaintiff pursuant to MCL 552.401, and the trial court erred by finding that the home’s value did not increase during the parties’ marriage.

                                                                                                                                    

When dividing property in a divorce proceeding, a trial court must first determine whether property is a marital asset or a party’s separate asset. Reeves v Reeves, 226 Mich App 490, 493-494 (1997). In general, marital assets are subject to division among the parties, but a party’s separate assets may not be invaded. McNamara v Horner, 249 Mich App 177, 183 (2002). Marital assets are those assets that are earned or acquired during the marriage, while separate assets are those assets that are obtained or earned before the marriage. Cunningham v Cunningham, 289 Mich App 195, 201 (2010). “Normally, property received by a married party as an inheritance, but kept separate from marital property, is deemed to be separate property not subject to distribution.” Dart v Dart, 460 Mich 573, 584-585 (1999). However, “separate assets may lose their character as separate property and transform into marital property if they are commingled with marital assets and ‘treated by the parties as marital property.’ ” Cunningham, 289 Mich App at 201, quoting Pickering v Pickering, 268 Mich App 1, 11 (2005). The conduct of the parties is the clearest indicia of whether they intended to treat the asset as marital or separate property. Cunningham, 289 Mich App at 209.

 

 

In Piccard, supra, property records indicated that the inherited home had an assessed value of $68,482 in 2002 and $72,200 in 2012. Generally, property is assessed at 50% of its true cash value. MCL 211.27a(1). Thus, the property records show that the value of the inherited home increased from $139,964 to $144,400 during the marriage.

 

 

Defendant also testified that he believed the value of the home was $250,000 or $350,000, and that he spent approximately $80,000 on improvements to the home. Although the trial court acknowledged defendant’s testimony, it noted that he did not substantiate the testimony with any documentary evidence. Under these circumstances, the trial court did not clearly err by discounting defendant’s testimony regarding the value of the inherited home and his monetary contributions toward improvements on the property.

 

 

However, the trial court did clearly err by finding that the home did not increase in value. Indeed, the only documentary evidence before the trial court indicated that the home increased by $4,436 in value during the marriage. Under Reeves, the trial court should have included this amount in the marital estate. Therefore, the Court of Appeals reversed the trial court’s finding regarding the increased value of the inherited home and remanded the case for equitable distribution of the $4,436 increased value.