Do you own a business and are you getting divorced? You are probably anxious about what will happen to your business in your Michigan divorce, and whether you will be forced to close or sell the business, or to sell your interest in the business. The answer depends in part on whether the business will be classified as marital property, whether you co-own the business with your spouse, whether you are able to negotiate a property settlement agreement with your spouse, and how the court ultimately decides what an equitable distribution of your marital property looks like under Michigan law.
When the Business is Marital Property
The first question you will need to consider is whether your business will be classified as marital property (as opposed to separate or non-marital property). If your business is not marital property, then it will not be divided in your divorce according to Michigan divorce law. If it is classified, or likely to be classified, as marital property, then you will need to consider the potential ways in which the court will consider the business in the process of property division.
In some divorce cases, a business is commingled property—meaning that it has characteristics of marital and separate property. If this is true in your divorce case, the court will try to trace out the marital from the separate property.
When You Co-Own the Business with Your Spouse
According to the American Bar Association, when spouses co-own a business together and decide to get divorced, they will typically face one of three scenarios:
- One of the spouses can buy out the other spouse;
- Spouses can sell the business; or
- Spouses can remain in business together.
When You Do Not Co-Own the Business With Your Spouse
If you are the sole proprietor of your business, or if you are in business with other partners or members or shareholders who are not your spouse, then the options can become a bit different. Like we mentioned above, if you can reach a property settlement agreement with your spouse, or if you are willing to give up other marital property in order to keep your business, it is certainly possible that your involvement in the business will not change with your divorce.
However, if your spouse will not negotiate a settlement agreement, and if the court ultimately determines that your portion of the business is marital property that must be distributed, it may be necessary to hire a forensic expert to put a value on your interest. Most likely, you will be awarded your business interest and you will have to buy out your spouses interest or offset it with other assets.
Contact a Divorce Attorney in Michigan
Do you have questions or concerns about dividing a business in a Michigan divorce? Our experienced Michigan divorce attorneys know how complicated this issue can be, and we want to do everything possible to help you maintain your business in a contested divorce case. Contact the Law Offices of Michael A. Robbins to speak with an advocate at our firm about ways to negotiate a settlement agreement with your spouse or to strategize about maintaining your business despite an impending divorce.