What should I do about my family business at the time of divorce?

On Behalf of | Jun 18, 2020 | Divorce |

Those in the greater Detroit area going through a divorce and who own a small business probably worry about what they are going to do to protect it. After all, a thriving small business is often the product of years of time and effort that no one wants to see lost.

While there are many options from a financial perspective, the right one is going to depend on a person’s circumstances. It makes a huge difference, for instance, whether the person’s spouse also owns the business or has been involved in it.

It also makes a huge difference whether the couple is able to maintain a professional working relationship. If they are, the best option may be for the couple to continue to carry on the business togetherl.

In other cases, though, the couple will realize that they need to part ways with respect to the business. In still other cases, it may be that one of the spouses isn’t directly involved in the affairs of the business and would have no interest in taking over.

If the business is marital property, it will be subject to property division under Michigan law. What this means is that a judge will divide the business equitably, that is, in a fair and just manner, between the two spouses.

When it comes to division, which spouse legally owns what share of the business is not decisive. The judge will look at a number of factors, including what each spouse’s income potential is and how much each invested in the business in terms of both time and money.

Usually, if a couple is going to part ways, they either will agree to sell it outright or have one spouse pay off the other in order to buy out the other spouse. This will require the couple to put a value on the family business. Doing so can be a complicated legal process which will involve financial experts.