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If you’re a business owner or the spouse of one and are going through a divorce, you most likely have lots of questions. Who gets to keep the business? Will we have to sell it? What may I have to give up if I want to keep my business? These are all very legitimate concerns, and they shouldn’t be addressed by anyone other than a knowledgeable business owner divorce lawyer. Fortunately, you are in the right place. Contact Alan B. Cooper & Associates, PLLC today so we can answer your questions and get started fighting for your best interests.
Whether your divorce involves a small family business or a large corporation, it is imperative that you have a competent Farmington Hills divorce lawyer in your corner who understands the various nuances often associated with divorces that involve businesses. Alan B. Cooper & Associates, PLLC is here to fight for the best outcome possible on your behalf.
Michigan is an equitable distribution state, which means that when a couple gets divorced, marital property is divided fairly, but not necessarily equally, between the spouses. Marital property includes any assets that were acquired during the marriage, regardless of whose name they are in. Separate property includes any assets that were owned before the marriage, or that were acquired by gift or inheritance during the marriage. Separate property is not subject to division, unless it was commingled with marital property.
A business can be considered either marital or separate property, depending on when and how it was started or acquired. If the business was established or purchased during the marriage, it is likely to be classified as marital property and subject to division, but if it was started or acquired before the marriage, it may be considered separate property, unless the non-owner spouse contributed to its growth/maintenance, or it increased in value during the marriage. In that case, the non-owner spouse may be entitled to a share of the business value.
The first step in dividing a business in a divorce is to determine its value. This can be done by hiring a professional business valuator, who will examine the business’s income, assets, liabilities, goodwill, and market potential. The valuator will also consider factors such as the type of business, the industry trends, the competition, and the economic conditions. The valuator will then provide an opinion on the fair market value of the business. The next step is to decide how to distribute the business value between the spouses.
There are several options for doing this, including selling the business and splitting the proceeds, buying out the other spouse’s interest in the business, co-own the business (this may not work if you can’t cooperate and communicate with your spouse), or creating a trust or partnership.
Selling the business and splitting the proceeds is far from ideal, especially if you are the spouse who runs the business, but it is the simplest option. Buying out the other spouse’s interest allows the business owner to keep the business and pay off the other spouse’s share of the value. Creating a trust or partnership will allow one spouse to manage the business and pay a percentage of the income to the other spouse. Ultimately, these are just some of your options, and the best option for you will depend on the specifics of your case.
One of the best ways to protect your business from a future divorce is by drafting a prenuptial or postnuptial agreement. These agreements can specify exactly how your business will be treated in the event of a divorce. For example, you can state that the business will be treated as separate property, limit your spouse’s claim to the business’s value, or set a predetermined buyout amount. Importantly, you should note that prenuptial agreements are entered into solely before a couple is married, while postnuptial agreements are executed after a couple is married, but before they get divorced.
Whether you’re a business owner or the spouse of one, if your divorce involves a business, you need a seasoned Oakland County business owner divorce lawyer in your corner. Fortunately, you are in the right place. Contact Alan B. Cooper & Associates, PLLC today to schedule your initial consultation with our dedicated Michigan family law firm.