Contact Us Today 248-608-4123

Michigan Family Law Blog

Divorce and Business Owners in Michigan.

Posted by Cameron Goulding | Sep 27, 2022 | 0 Comments

Divorce Lawyer in Michigan for Business Owners

When a couple divorces in Michigan, their debt and marital property – the property they have accumulated and shared during their marriage – is subject to property distribution. In Michigan, the court will split the martial property in an equitable or relatively equal way.  Sometimes, marital property includes a business that the couple started together or, alternatively, one spouse started either before or during the marriage and continued to grow during the marriage. The business, under these circumstances, will also likely become subject to property division.

At North Oakland Divorce Lawyer, we understand the blood, sweat, and tears you put into starting and developing a business. We know you don't want to compromise that hard work. Call us at (248) 608-4123 to set up a consultation today.

How Will a Divorce Affect My Business in Michigan?

A divorce can affect every aspect of your life, including your business. How your business is affected will depend on a number of factors.  Michigan is an equitable distribution state which means that property is divided equitably or fairly between the parties. This may or may not be half of the business. Even so, it is likely you will be expected to give up at least part of the business, or its value, to your spouse. The following are some factors that must be considered by the court when dividing property.

Who Owns the Business

Did you or your spouse inherit the business from family? Is it clear that only one spouse supported and worked at the business? These are both considerations that may help determine how a business will be divided in a divorce.  However, just because one spouse owned, worked at or managed the business and the other spouse did not, that does not mean the court will not consider at least some of the value of the business to be marital and order the owner spouse to "buy-out" the other spouse's interest

When Was the Business Started

If the business was formed prior to marriage, by one spouse or one spouse's family, in most instances, the court will assess the value of that spouse's interest in the business and then determine whether that entire value should be divided between the spouse's or just the increase in the value of the business that happened during the marriage.  After it makes that determination, in most cases the court will award the other spouse approximately half of that value.  When a business was started during the marriage, it will most likely be considered marital property and therefore subject to an equitable division between the spouses.  

Ways to Proactively Protect Your Business in Michigan

Fortunately, there are ways to protect your business so that you do not lose it, or part of it, in divorce proceedings. The best way to approach business protection depends on whether or not you are contemplating marriage and want to protect your interests, or if you are already married and fear a future divorce may harm your business. 

Prenuptial & Postnuptial Agreements

While no one wants to go into a marriage contemplating a divorce, it really is in your best interest to plan for the “what ifs” when you have a successful business you need to protect. A prenuptial agreement will help you do just that. It is an agreement made by two engaged parties wherein they address how assets will be divided in case of divorce. You are able to state in this agreement whether the business is even considered marital property and, therefore, whether it would be subject to division. 

A postnuptial agreement operates much like a prenuptial agreement, with the only difference being that it is entered into after marriage rather than before it. However, the law in Michigan is unclear as to whether a court will enforce a postnuptial agreement in the event of a divorce.

An Agreement to Buy/Sell

A buy/sell agreement is a way to establish how your spouse's interest in the business would be determined in case of divorce. You can also specify the amount of a cash award the spouse would receive for their share of the business in the event of a divorce. This type of agreement may be used to attempt to establish the value of a spouse's interest in a business. 

Ways to Protect Your Business During a Divorce in Michigan

If you have no contract, whether it's a prenup or an agreement to buy/sell, you can still take measures to protect the business. 

  1. Establish yourself as the sole owner of the business. Organizing documents should specify that the business is not transferable in the event of a divorce. To note, you may still need to provide a cash award to the non-titled spouse at the time of divorce.
  2. Keep your records. Even things like office furniture and office rent should not be paid with marital assets and maintaining records to clarify this is important.
  3. Separate finances. You should not mix business and personal expenses, and by not doing so, you can show that the business is separate. The opposite is true if you do commingle funds.
  4. Spouse as an employee. If your spouse worked at all, even if very minor, keep documents proving that the spouse was paid for their services. 

Generally, you want to maintain clear and thorough records of just about everything related to your business. 

Keep Your Business Safe: Get a Divorce Lawyer in Michigan

Even with any of the safeguards in place, a non-titled spouse may still pose a challenge to your business. They may try to inflate their contributions or obtain an appraisal that overvalues the business. The latter, at a minimum, is why having a divorce lawyer who is resourceful and knowledgeable is key to countering these tactics. 

At North Oakland Divorce Lawyer, our Michigan divorce attorney for business owners will provide you with all your legal options and help you keep your business intact. Contact us at (248) 608-4123 to schedule a consultation today. With the right lawyer, you can walk away from your marriage with your livelihood protected and your hard work secured.

About the Author

Cameron Goulding

A native of Oakland County, Michigan, family lawyer Cameron C. Goulding has been providing counseling and legal services of the highest caliber to individuals and families in Southeastern Michigan for over 24 years. Mr. Goulding grew up in Oakland County, Michigan and graduated from Birmingham G...


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Contact Us Today

Goulding Family Law & Mediation, PLC is committed to answering your questions about Divorce, Family Law, and Estate Planning law issues in Michigan.

We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.