Michigan spouses preparing for divorce have to look carefully at their marital estates. Much of what you own is likely property that you share with your spouse and therefore have to divide when you divorce. The equitable distribution rules in Michigan will require that a judge pursue a fair and reasonable solution for property division matters if the two of you cannot reach an amicable settlement before going to court.
More valuable assets tend to spark more serious conflicts, and businesses are a double threat. They represent not just a specific financial value but also a source of future income. Is it possible for you to protect some of your business’s assets as separate property in your divorce?
Multiple scenarios might help you protect business assets
There are numerous reasons that some of your business might be your separate property that is not subject to division in your divorce. If you started the business before you got married, then at least a portion of its assets and value will likely be separate property. The same is true if you inherited the business or if you protected it in a prenuptial agreement.
Typically, you will need to perform an in-depth evaluation of the business and create an inventory of its assets. When you purchased or acquired business assets and what resources you used for their acquisition and maintenance will influence whether those assets are separate or marital property. Your spouse’s contributions to the business will also matter. The more time and money they put into helping you run the company, the stronger their claim to a partial share of its value in the divorce.
Settling is often a good solution for business owners
Rather than litigating and putting your future in the hands of a Michigan family law judge, you have the option of negotiating your own settlement. Some couples, including those with large assets, may require the help of a third party, like a mediator, to resolve their disagreements about how to fairly value a business and divide it in a divorce.
You could offer other property to your spouse or even provide spousal support temporarily to secure concessions from them about the ownership of the business. You won’t have as much direct control over the terms if you litigate. Recognizing that dividing a business complicates Michigan divorces can help you approach this challenge in a manner that property protects you.