Kline Legal Group P.L.C.

Dealing with businesses during property division negotiations

Property division negotiations between divorcing couples in Michigan can be especially contentious when a family business is involved. Talks often get bogged down when spouses disagree about what a business is worth, and entrepreneurs may be accused of concealing income or hiding assets. Spouses may also be asked to choose between accepting payment for their share of the company and receiving spousal support based on anticipated future business income.

Businesses can be assessed based on the amount of income they produce or the value of the assets they hold. Coming to a firm number involves closely scrutinizing financial statements and other business documents. In many cases, experts are required to determine how much a commercial venture has appreciated during a marriage. This is important as the value of business assets owned by spouses before they married may be considered separate property and not subject to division.

Some business owners take on additional debt prior to a divorce to make their commercial ventures appear less attractive on paper. However, creative bookkeeping can also bring spouses to the attention of the Internal Revenue Service. In some cases, business values, expenses and revenues are established by examining similar companies.

These issues are especially common in high-asset divorce cases. If necessary, family law attorneys may call in forensic accountants to scrutinize complicated business transactions and provide clarity. When these issues cannot be resolved at the negotiating table, attorneys may recommend exploring alternative venues such as mediation. As a last resort, a spouse may decide to take their divorce case to court.

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Kline Legal Group P.L.C.
483 Little Lake Drive, Suite 200
Ann Arbor, MI 48103

Phone: 734-249-6100
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