If you’re a business owner going through a divorce in Michigan, you’re probably concerned about what will happen to the company you’ve worked so hard to build. Depending on the circumstances, your business (or parts of it) could be considered marital property and therefore subject to division. Consequently, it’s important that you get help from an experienced divorce attorney who can help you protect your business interests and seek a fair resolution to the divorce.
How Michigan Divorce Laws Affect Business Ownership
As an equitable distribution state, Michigan requires courts in divorce cases to divide property fairly between spouses. However, a “fair” division does not always mean an equal, 50-50 division. Courts can make unequal distributions based on consideration of various factors, such as the spouses’ respective financial situations and their contributions to acquiring and maintaining marital assets.
A divorce only requires the division of marital assets, with each spouse keeping their separate property. Separate property includes assets each spouse owned before the marriage, as well as certain assets acquired during the marriage, such as inheritances or exclusive gifts. Marital property includes assets acquired during the marriage or the increased value of separate assets during the marriage.
Business interests can qualify as marital property if the business was started during the marriage. However, even if a spouse begins a business before marriage, any increase in the business’s value during the marriage may become marital property.
Key Steps to Protect Business Interests
As a business owner, you can protect your interests by:
- Utilizing legal tools and agreements : Negotiating prenuptial or postnuptial agreements with your spouse can help you protect your business interests by excluding them from property division in a divorce. In addition, your business’s governing documents may include provisions restricting the transfer of ownership interests, helping avoid the need to transfer stock or equity in a divorce.
- Maintaining comprehensive financial records : Accurate financial records can help you keep personal and business finances separate and also help you determine the portion of your company’s value that qualifies as marital property.
- Obtaining accurate business valuations : Consider hiring professional business appraisers to get an expert valuation of your ownership interests, which can help you avoid overpaying to retain ownership or losing control of your company.
- Evaluating alternative legal avenues : Rather than turning over a portion of your business ownership interest to your spouse, you might consider other alternatives that allow you to keep your business whole. For example, you could buy out your spouse’s interest or offset the value of your spouse’s interest with other marital assets, such as real estate, investments, or savings.
Working with Legal and Financial Professionals
One way you can protect your interests is by working with legal and financial professionals who have specific experience advising owners going through a divorce. As a business owner getting a divorce, you should prioritize working with divorce attorneys, business appraisers, and accountants who have experience resolving issues involving business interests in Michigan divorces. Consult a divorce lawyer as early as possible, ideally before you or your spouse files for divorce, as this can help you obtain a favorable resolution through a negotiated settlement or other legal tools.
Contact a Divorce Attorney Today
As a business owner, you naturally want to protect the company you’ve dedicated your career to building. As a result, you need experienced counsel and advocacy from an attorney to help you preserve your ownership interests and hard work as you prepare to go through a divorce. Contact The Smith Law Offices, P.C. today for a free, confidential consultation with a divorce lawyer to find out how we can protect your business ownership interests and seek a fair resolution to property division.
