In every Michigan divorce, the parties must divide their marital property according to state law. The marital property includes nearly all assets and debts the couple acquired during the marriage, so this division of property can involve everything from household items to real estate and retirement accounts. Some of these assets are much easier to divide than others.
If the parties owned a business during the marriage, property division can be particularly complicated.
How to divide a business in divorce
One common method for dividing a business during divorce is for one spouse to keep the business. What makes this method complicated is that, generally, both spouses have a property interest in the business. This means the spouse keeping the business must buy out the other spouse’s share. Before they can do this, they must agree on a value for the business. Typically, divorcing spouses hire an expert to evaluate the business and determine its fair market value.
Another option is for both spouses to keep the business. This is the least common option, but if the spouses are able to work together amicably following the divorce, it can be the least disruptive to the business.
A third option is for both spouses to agree to sell the business. Once the business has sold, the divorcing couple can handle division of the proceeds as part of their property division settlement agreement. This can potentially delay the property division process if they have to wait on the sale of the business.
It is helpful for divorcing spouses who own a business to be able to explore all of these different options to determine which is the best fit for them. The family law process can aid them during their divorce and help provide them with the tools to arrive at a property settlement agreement that includes their business.