Often, one of the biggest surprises in a divorce is the impact it has on a business. If you own a business in Michigan and are getting a divorce, then you really have to be aware of what is at risk. The last thing you want is to be unprepared for the divorce process and be unable to protect your business.
According to SMB CEO, the chances are fairly good the court will divide your business equally between you and your spouse in the divorce. This means you will have to work as a partner with your ex-spouse or buy him or her out so you can regain full ownership of the business. A worst-case scenario is having to sell your business because you cannot afford to buy out your ex-spouse and he or she wants to sell.
You can avoid this situation in some cases. If you own the business with a partner, you can create a partnership agreement clause that covers what happens in the event one of you gets divorced. You may also be able to protect your business in a pre-nuptial agreement. Both of these require planning ahead.
However, if you established your business after your marriage, it is often fair game in the divorce settlement. On the other hand, if you had the business prior to your marriage, you may not have to share it with your spouse. The court will consider a few things to determine if it is marital property. Typically, if you ever used household funds in the business or your spouse was involved in the business, then it will be marital property. This is a complex situation. In most cases, a business is marital property, so you need to plan ahead for splitting it with your spouse. This information is for education and is not legal advice.