You regularly put in long hours to ensure your business is successful. You also have a plan for taking your company to the next level. While your marriage is heading for divorce, your business has never been better. Will you lose your business during your divorce?
In Michigan, judges divide marital property equitably. Therefore, if you are going through a divorce, you must mentally divide your assets into marital and separate categories. As you may suspect, doing so can be challenging. In fact, deciding whether you own your business may require a complicated legal analysis. Still, you should understand a few things about business ownership during and after divorce proceedings.
Marital versus separate property
If you owned your business before your marriage, there is a good chance a judge will not divide the company between you and your soon-to-be ex-spouse. There are two exceptions, however. First, if your partner contributed to the acquisition, accumulation or improvement of the business, a judge may award a portion of the company to him or her. Also, if there are insufficient marital assets to provide for your spouse after divorce, a judge may choose to tap into your otherwise separate business.
Valuing the business
If you started your business during your marriage, a judge may consider it to be marital property. As mentioned, Michigan law requires judges to split marital property in an equitable way. Therefore, you must know how much your business is worth to better plan for your divorce proceedings. Generally, there are two ways to value a business during divorce: book value or market value. As you may suspect, these valuation methods often lead to wildly different conclusions. Accordingly, you should probably plan to hire your own expert to evaluate the worth of your business venture.
You have a great deal of energy, money and emotion invested in your business. With a bit of knowledge and the right plan, you may be able to increase the likelihood of retaining business ownership after your divorce.