Professional practices can include many different types of businesses, including, for example, health care practices, accounting firms, law offices, and other kinds of businesses. If you own a professional practice of any type and are planning to get divorced in Michigan, you most likely are wondering: can a professional practice be divided in a Michigan divorce? Regardless of whether your spouse is an official co-owner of the practice, you should know that the assets and debts of the professional practice could be considered marital property and may be divided in a divorce. However, the professional practice itself will not be divided such that your spouse becomes a business owner and responsible for handling aspects of the business. Our Michigan divorce lawyers can explain in more detail how professional practice and other businesses can be divided in a divorce.
Professional Practices May be Classified as Marital Property
If you are planning to file for divorce or know that your spouse has filed, you should understand that Michigan is an equitable distribution state. What this means is that, under Michigan law, all assets and debts will be classified as separate property or marital property, and anything that is classified as marital property will be divisible in the divorce. In most marriages, at least a portion of the assets and debts from a professional practice will be classified as marital property unless they have been expressly excluded through a prenuptial or postnuptial agreement.
Indeed, most assets or debts acquired after the date of the marriage will be considered divisible marital property unless they have been excluded through an agreement, or acquired by one of the spouses as a third-party gift or through an inheritance. Any marital assets invested in a professional practice will also remain marital property that can be divided in a divorce.
Valuing and Dividing Assets or Debts of the Professional Practice
In determining that all or part of the assets and debts of a professional practice are marital property, the court will value the property. Then, a few different courses of action may occur. One spouse may buy out the other spouse’s interest in the professional practice. Or, if one of the spouses is the official owner of the professional practice, she or he may be able to enter into a settlement agreement with the other spouse, giving up other marital assets in order to keep the professional practice so that the division of assets and debts is still equitable. In other cases, it may be necessary to dissolve the professional practice and for the assets and debts to be divided between the parties according to equitable distribution.
Professional Practice Will Not Literally be Divided
We want to clarify that, although the assets and debts of a professional practice may be divisible marital property under Michigan law, the court will not divide a professional practice literally. To be clear, the court will not award part of the practice to one spouse and another part to the other spouse.
Contact Our Divorce Lawyers in Michigan
If you have questions about dividing professional practices or businesses in a Michigan divorce, one of our Michigan divorce attorneys can speak with you today. Contact the Law Offices of Michael A. Robbins for more information.
