The results of a divorce case can significantly affect a person’s life in a number of ways. If you are a business owner, you might even find that the results of your divorce can deprive you of a major source of livelihood.
It is important to acknowledge as soon as possible that divorce directly impacts a business owned by either spouse in the marriage. By understanding what happens to a business in a divorce, you can take the necessary steps to prepare.
Is a business split up in a divorce?
Michigan property division laws follow a policy of equitable division for all marital assets, including a business owned by either spouse. Without a separation agreement in place that outlines what will become of the business in the event of divorce, it is possible that enterprise ownership will split between both spouses. Another possibility is that you might liquidate the business entirely and split the proceeds.
Can you protect your business through the divorce process?
The best way to protect a family business is often to enter the divorce process with a prenuptial or postnuptial agreement already in place. Another solution is to undergo mediation during the divorce process in which you and your spouse can come to an agreement outside of court regarding the distribution of marital assets. You may arrive at a compromise in which you maintain full ownership of the business in exchange for other marital assets that your soon-to-be ex-spouse values.
In the absence of an established agreement or compromise, the fate of a business in a divorce is uncertain. It is important to negotiate with your spouse or risk losing the business entirely.