What is the difference between marital property and separate property under Michigan Law?

The distinction between marital property and separate property is crucial in divorce proceedings. Marital property generally includes all assets acquired or earned by either spouse during the marriage. This encompasses income, real estate, and other assets obtained while the couple is married Cunningham v. Cunningham, 289 Mich. App. 195, Woodington v. Shokoohi, 288 Mich. App. 352. Separate property, on the other hand, consists of assets acquired by either spouse before the marriage or through inheritance, gift, or personal injury compensation during the marriage, provided these assets are kept separate from marital property Cunningham v. Cunningham, 289 Mich. App. 195, Marital property is subject to division between the spouses upon divorce, while separate property typically remains with the individual who owns it. However, separate property can lose its distinct status and become marital property if it is commingled with marital assets or treated as such by the parties Cunningham v. Cunningham, 289 Mich. App. 195, Hodge v. Parks, 303 Mich. App. 552. For instance, if an inheritance is deposited into a joint account and used for marital expenses, it may be considered marital property Cunningham v. Cunningham, 289 Mich. App. 195. Additionally, the appreciation of separate property during the marriage can be classified as marital property if the appreciation is due to the active efforts of either spouse Maher v. Maher, 488 Mich. 874. Conversely, passive appreciation, such as market-driven increases in value, generally remains separate property. The court may also invade separate property if one spouse significantly contributed to its acquisition or if the marital estate is insufficient to provide for the needs of the other spouse or children Reeves v. Reeves, 226 Mich. App. 490, Darwish v. Darwish, 100 Mich. App. 758.