In a Michigan divorce, addressing the division of business assets can be one of the more complex and time-consuming aspects. Michigan’s approach to dividing assets and debts, including business interests, requires a thorough evaluation of asset values. This process varies depending on whether the business is considered separate or marital property and whether it is owned by one or both spouses.
Determining the Business’s Status as Marital Property
The initial step in a Michigan divorce involving a business is to ascertain if the business is marital property. If the business was established or acquired during the marriage, it typically falls under marital property and is subject to equitable distribution. Conversely, a business that was founded prior to the marriage might be deemed separate property, excluding it, or at least a portion of its value, from division.
Examples of Business Assets in a Divorce
In a Michigan divorce, business assets can include a wide range of items integral to the operation and value of a business. Examples are tangible assets like real estate, equipment, inventory, and vehicles, as well as intangible assets such as
- Customer lists
- Business bank accounts
- Profits of the business
Each of these assets will be evaluated for division based on their nature as marital or separate property within the equitable distribution framework of Michigan law.
If the business is classified as marital property, its valuation is crucial. This process usually involves engaging a professional business valuator who will assess the business’s income, assets, and liabilities. Working in tandem with your attorney, the valuator ensures all pertinent business documentation is considered during the discovery stage of the divorce.
Options for Property Division
Selling the Business: Selling might appear straightforward, but it can lead to disputes over the sales price and necessitate judicial intervention. Post-sale, the absence of business income can significantly affect child and spousal support calculations.
Buyout by One Spouse: If one spouse wishes to continue running the business, a buyout is a viable option. This can involve using liquid assets to compensate the other spouse or reallocating other marital assets to balance the buyout. Structured payment plans are also possible, contingent on the business’s continued financial performance.
Continued Co-Ownership: Both spouses may opt to maintain joint ownership, sharing profits and losses. This requires effective collaboration and joint decision-making regarding the business.
It’s critical to recognize that dividing a business in a divorce can have substantial tax implications. Consulting with a tax attorney or accountant is essential to understand these consequences fully. This due diligence ensures that both parties make informed decisions about their shared business assets.
Michigan Divorce Lawyer
At a crossroads like divorce, where the emotional and legal landscapes intertwine, the seasoned divorce attorneys at Kelly & Kelly P.C. offer more than just representation; they provide a compass to guide you through. With over 30 years of dedicated family law practice in Michigan, they stand ready to defend your rights and advocate for your best interests.
Our extensive courtroom experience, alongside a compassionate understanding of the profound personal impact of divorce, makes them an unparalleled ally. For legal support that combines empathetic counsel with strategic, vigorous representation, consider the trusted team at Kelly & Kelly for your divorce proceedings.