When people in Michigan decide to divorce, the financial impact can be long-lasting and severe. However, business owners may have unique concerns about their particular situation. A small family business may be the largest asset owned by a couple, and it may also provide the bulk of the family income. Some entrepreneurs may worry that their business will fall apart under the weight of a divorce settlement while others may be concerned that they will remain yoked against their will in a partnership with their former spouse.
A successful closely held business is likely to play a major role in the property division process, especially if it also provides a substantial amount of family income. Because Michigan is an equitable distribution state, a company will not automatically be divided in half, even if it was founded after the marriage began. However, in almost all cases, business owners should prepare for some level of division of the business’ value. This does not necessarily mean dividing shares in the company or selling off the company to divide the proceeds. People can negotiate an agreement that provides an alternative solution.
For example, some business owners may walk away from the divorce with the business but give the bulk of the other marital property to the former spouse. This depends on the value of the business as well as that of other marital assets. In other cases, people may develop a buy-out agreement in which one spouse pays the other for his or her share over time through structured payments.
There are a number of considerations for entrepreneurs going through a divorce, including developing a proper business value and planning for the future. A family law attorney may work with a divorcing business owner to negotiate a fair settlement on property division, spousal support and other matters.