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Distributing Business Assets in Your Michigan Divorce

On Behalf of | Jun 11, 2020 | Uncategorized |

The distribution of business assets in a Michigan divorce is often one of the more complicated property division issues. In some cases, spouses will own a business together, and they will need to decide how to move forward. For some married couples who are getting divorced and are in this situation, they may decide to continue working together and keeping the business open, or they may decide that one spouse will buy out the other spouse so that only one of the parties owns the business after the divorce. Where a buyout is impractical, the parties may sell the business. In scenarios in which only one of the spouses is involved in the business (and may or may not co-own the business with other people), it is likely that at least some of the business assets will be classified as marital property and will be subject to distribution. In these situations, the spouse who owns the business may or may not be able to continue on with the business.

We want to tell you more about distributing business assets in a Michigan divorce, according to Michigan law.

When Only One Spouse Owns the Business

If just one of the spouses owns the business or co-owns it with other people who are not the other spouse, the distribution of business assets can become extremely complicated. If that spouse became an owner or co-owner of the business after the date of marriage, then any of that spouse’s business assets after the date of marriage will be subject to distribution unless the business assets are specifically classified as separate property in a premarital agreement.

When the spouse owns the business as a sole proprietorship, it may be possible for that spouse to negotiate a marital property settlement agreement in which the spouse who owns the business retains all of the business assets in order to keep that business open, and gives up other assets to the spouse so that the business can continue running. When the spouse co-owns the business with other parties, a property settlement agreement is still possible, allowing that spouse to remain a co-owner or partner in the business while the non-business owner spouse gets other assets in exchange.

However, when a property settlement agreement cannot be reached, distributing business assets in a co-owned business with other outside parties can become much more difficult since the distribution of business assets ultimately could have an enormous impact on the other business owners. In some cases, the other owners may need to buy out the spouse who is a co-owner, and the funds obtained through the buyout will be distributed. Depending upon the type of business structure, it may be necessary to dissolve the business altogether. For example, a partnership or an LLC may need to be dissolved.

When Spouses Own a Business Together

If the spouses own a business together, some of the same situations we discussed above are likely to apply. It may be possible for one spouse to buy out the other, and a property settlement agreement may be an option. Depending upon the type of business, however, it may be necessary to dissolve it if the spouses are not going to continue running it together.

Yet running the business together remains an option after a divorce. If the spouses believe remaining in business together is a practical option, they do not need to remain married in order to keep their co-owned business open.

Contact a Michigan Divorce Attorney

If you have questions about dissolving a business in your Michigan divorce, a Michigan divorce attorney can help you. Contact the Law Offices of Michael A. Robbins to learn more about how we can assist with your divorce.