If you and your spouse are facing divorce and you have built a business together or share a financial stake in a business, your financial future may be in jeopardy. When couples who divorce have to divide their assets, including a business, things can get messy quickly, especially when the divorce is contentious.
Here is some information that can help you better understand your options in terms of dividing a business in a divorce in Michigan. It is important to know some basics regarding how the law views asset division between spouses.
Property and asset division in Michigan
Michigan is not a community property state, so when you divorce, the court divides your property and assets into a system that distributes them equitably. This means the assets may not have an equal or 50/50 division as is the case in community property states. In states with equitable distribution laws, there are many factors that the law takes into consideration to determine how to divide the assets. One of these is how long your marriage lasted. If you did not take measures prior to the marriage to protect your business interests, such as a prenuptial agreement or a specific operating agreement that protects your interest in the case of a divorce, you may need to take action to protect your stake in the business. One option would be to buy out your spouse’s stake in the business using your share of other marital assets.
Dividing a business in a divorce
One of the factors that judges consider when dividing up a business is the value of the business itself. Valuation of a business is a complex process. It may require you to bring in financial experts who can accurately assess various aspects of the business in order to appraise the value.
If you and your spouse cannot come to an agreement about how to divide your property through a conflict-reducing process such as mediation or collaborative law, you may need to proceed to court in order to have a judge make that determination. If that is the case, you should consult with an attorney who has experience working in divorces for couples who share a business interest.