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Division of Business Assets in a Michigan Divorce


When a marriage ends in divorce, one of the major issues that must be addressed is the property division, including any business interests. According to Michigan Divorce Law, Any time assets and debts must be divided, some discovery or exploring of the assets’ values must be done.  However, whether one spouse owns a separate property or both spouses own the business together, the process of dividing marital assets makes the divorce process more time consuming and complex.  Let’s explore what needs to be done and what some of your options are.

1. Determine if Your Business is A Marital Property

The first step in dividing a business in a divorce is to determine if the business is considered a marital property. In a Michigan divorce, If the business was started or acquired during the marriage, it is likely to be considered community property and subject to equitable distribution. However, if the business was started before the marriage, the entire business or a portion of the value of the business may be considered a separate property and not subject to asset division in Michigan.

2. Get Your Business Evaluated

Once it has been determined that the business is a marital property, the next step is to know the value of the business. This is typically done by hiring a qualified business valuator to do a business valuation. The valuator will consider factors such as the business’s income, assets, and liabilities to determine its value. The business valuator should be working closely with your Michigan attorney to ensure that all necessary business documents are taken into consideration. This part of the process is called the discovery stage of the Michigan divorce proceedings.

Once the value of the business has been established, both spouses can settle on how to carry on property division.

3. Agree on How to Deal with Property Division

– Sale of Your Michigan Business

At first glance, selling the business may seem to be the easiest route to go. The parties may agree to sell the business and divide the proceeds. However, selling the business does not always decrease the litigation cost, shorten the time of litigation and might not improve your financial situation. Agreeing to a sales price sometimes creates a substantial dispute and potentially requires a hearing to get a judge’s decision.  When the business is sold, one or both spouses will be without a source of income. The lack of income will influence child and spousal support calculations.

– Buyout by One of The Spouses

One of the spouses may want to continue operating the business, and this is an option if this spouse is able to buy out the other spouse.  The buying spouse would need to have sufficient liquid assets to pay off the selling spouse’s share of the value. Or if the parties own enough assets to equalize the business’ value, a greater share of other assets can be awarded to the spouse that needs to be bought out. And lastly, spouses sometimes agree to a structured payment plan, but that of course is only a good option if the business will continue to produce sufficient funds to make the payments.

– Co-ownership of The Business

Both spouses may choose to continue to co-own the business and divide the profits and losses accordingly. This option can be challenging, as it requires the parties to continue to work together and make decisions about the business.

It is important to note that the division of a business in a Michigan divorce can have significant tax implications, and it is important to consult with a tax attorney or accountant to understand the potential tax consequences.

Contact Our Experienced Michigan Divorce Lawyers Today!

If you own your business, you probably have worked hard to grow the business and make it successful. You may have an emotional attachment to the business, and you’d hate to sell it or harm the cash flow by having to buy out your spouse.  For this reason, we always recommend that our clients first explore mediation or a collaborative approach when exploring the division of a business.  Mediation, collaborative divorce and arbitration often are more cost effective than traditional litigation.  If you would like to explore your options before filing for divorce or if you are concerned about your current divorce proceedings, give our experienced Michigan family law attorney a call at 616-285-0808 and let’s have a cup of coffee and explore your options to find the best outcome for you.

Kraayeveld Family law attorneys are proud to serve Grand rapids, Forest Hills, Ada, cascade, Holland, Georgetown and all neighboring Michigan communities.