Owners of a family business operating in Michigan may require legal assistance when going through a divorce to protect and maintain the company’s revenue. Assets and property acquired during a marriage in the Wolverine State belong to both spouses, which they generally own equally. A family business, however, typically has difficult issues to consider that may not result in an equal division between the two spouses.
Depending on when the business began, who started it and how the couple managed it, an ex-spouse may not automatically have a legal claim to its profits. If one spouse began a company with his or her separate funds, the court generally views it as separate property. For an ex-spouse to claim a payout or portion of the profits during a divorce, he or she may need to prove a fair contribution to its success.
Selling the business to avoid a battle
When a couple starts a family business together, a battle over its ownership may arise during the divorce proceedings, especially if both individuals managed the company. While it could seem uncomfortable to sell the business, doing so may provide the easiest option for splitting it equally between the two spouses.
As noted by Forbes magazine, finding an interested buyer and then dividing the net proceeds from the business sale works for some divorcing couples. In situations where an individual wishes to retire or start a new business, an opportunity to sell may also help provide the necessary funds to do so.
Buying the business from a spouse
When a spouse dedicated his or her full-time efforts to growing a family business, the motivation to sell may not be there. He or she may wish to remain an owner and continue managing the business after the divorce proceedings. When a couple can no longer work together, however, one ex-spouse may consider buying out the other, much like non-marital partners who own a business together. Having a thorough business valuation performed could help determine a fair selling price.