November 2015 : SKELLY at Odds with Michigan Statute

Michigan Family Law Journal : TAX TRENDS AND DEVELOPMENTS Feature

by Joseph W. Cunningham, JD, CPA

Excerpt:

In its 2009 published decision in Skelly v Skelly (No. 287127, 12/29/09) (Skelly), the Court of Appeals (COA) essentially ruled that employee benefits earned during marriage are not marital assets if subject to forfeiture on the occurrence – or non-occurrence – of an event after the divorce.

The Skelly decision has previously been characterized in this column as arbitrary, overbroad, and inconsistent with the equitable, case specific nature of divorce. What was not mentioned previously is that Skelly is out of step with Michigan statute – MCL 552.18. is was recently brought to my attention by Scott Bassett, who in fact drafted the language that became MCL 552.18 in 1985.

Skelly

Recap of the case:

  • After 25 years of marriage, H filed for divorce.
  • He had attained a high position with Ford and in 2007, in the latter part of his career, was awarded a $108,000 “Retention Bonus” payable in three installments of $36,000 on each of May 31, 2007, 2008, and 2009.
  • Entitlement to the entire bonus was conditioned on his continued employment at Ford through May 31, 2009.
  • The trial court ruled that the first two $36,000 installments were marital property since, evidently, both had been received before the 7/23/08 date of divorce.
  • H appealed.
  • As indicated above, the COA ruled that all three $36,000 payments – including the two received during marriage – were not marital property since all were conditioned on an event occurring after the divorce – H’s continued employment at Ford through May 31, 2009.

MCL 552.18

The 1985 statute, in pertinent part, is as follows (emphasis added):

Continued in PDF file below…Skelly at Odds with Michigan Statute”
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Complete Michigan Family Law Journal available at: Michigan Bar website – Family Law Section