Property division is often one of the most contentious topics during a divorce, and when the spouses share a family business, it can be even more complex and emotional. These types of companies often represent years of dedication, hard work, and financial investment from both parties. During your divorce, it is imperative that you understand the various ways that your family business can be divided. To learn more and secure skilled representation during your case, reach out to an experienced Oakland County business owner divorce lawyer today.
Is a Family Business Subject to Property Division?
Before it can be decided how the business will be divided, it is first important to establish who is legally entitled to the business, how much interest each spouse has in the company, and what it is worth.
Only marital property is subject to property division, per Michigan’s equitable distribution laws. Any jointly owned assets are to be equitably divided between the couple upon the divorce. Property that is considered separate will not be touched, and its respective owner will maintain control.
Family businesses are often considered marital property. If the business was started during the marriage, with the help of marital funds, or by joint efforts from the spouses, it is considered owned by both parties. However, even if the company was founded before the marriage, it can be considered marital property depending on certain factors. If marital assets were used to fund or improve the business, or if the other spouse contributed to the company through finances, labor, ideas, etc., it can be considered jointly owned. One spouse could even have a claim over part of the company if they sacrificed their career or education to help the other create and maintain the business.
How Will My Family Business Get Divided During My Divorce?
Once it has been determined that all or parts of the company are subject to equitable distribution, there are several options for how to divide the family business during a divorce. Consider the following.
- The spouses sell the business and divide the proceeds from the sale equitably
- One spouse buys the other out by paying them the amount that their interest in the company is worth
- The spouses divide the business and restructure the company so that each spouse controls either a separate entity or a distinct part of the business
- The spouses continue to co-own the business after the divorce, with no changes to the professional relationship
There is no one-size-fits-all solution to how to divide a jointly owned business during a divorce. It can be a difficult process both logistically and emotionally. If you and your spouse have a family business, it is crucial that you weigh all of your options to ensure that you decide on a plan that best works for both of you. To learn more about your legal rights and options, reach out to an experienced attorney today.