Determining who gets what after a divorce—the division of property—is a key component of a divorce settlement and can often be contentious. When a married couple has a small business, and they decide to divorce, there are several options to consider for the future of the business, depending upon their specific circumstances.
Is the business marital property?
The first thing to determine when addressing how property should be divided after a divorce is whether the property is considered marital property. Property that is acquired during a marriage is considered marital property, and property that one spouse owned prior to the marriage is considered separate property.
Michigan’s laws of equitable distribution
If a business was started or acquired during the time a couple was married, then it is most often considered to be marital property and is subject to Michigan’s laws of equitable distribution. Under these laws, judges divide a couple’s marital assets and earnings based on what is deemed as “fair” under the circumstances of each case. If, however, the business was started prior to the marriage, then some or all of the value of the business may be considered separate property and is not subject to asset division.
Jointly operate the business
If a couple shares joint ownership of a business, they may choose to continue operating that business in the same manner after they divorce. In some situations, keeping the business is in the best interests of the couple financially, and their relationship may be such that working together is a desirable option.
Buyout or dissolve
If continuing to run the business together is not practical, then one spouse may buy out the other, or the couple may choose to dissolve the business altogether.
What is best for one couple may not be the best for another. A skilled family law attorney will review all your assets, including your business, to help you retain your property during the division of marital assets.