Divorce for Business Owners in Sterling Heights

Divorce for Business Owners in Sterling Heights

SOLUTIONS FOR YOU

Major changes were recently made to Michigan’s child support laws. These amendments could have a significant impact on how much a parent is required to pay in child support, so if you are considering a divorce and have children, you should speak with an experienced Birmingham family law attorney who can explain your obligations under the new laws.

Dividing property is one of the most difficult tasks faced by divorcing couples. The process can become even more complicated and potentially contentious when complex assets, such as a business interest, are involved. How a business will be divided depends on a number of factors, including when the company was established, its value, and how much each party contributed to its success. Providing proof of these factors can be difficult, which can put a party at risk of receiving an unfair share of the couple’s business assets, so if you and your spouse own a business and are considering a divorce, it is critical to speak with an experienced Sterling Heights divorce attorney who can protect your interests.

Separate vs Community Property

In Michigan, a couple’s assets must be divided equitably, rather than evenly, in the event of a divorce. However, before a court can begin the process of dividing assets, it will first determine which assets constitute community, or marital property and which qualify as separate property. This is an important distinction because separate property is not divisible and will be granted wholly to the party who owned it prior to the marriage. Marital property, on the other hand, will be subject to equitable division. Although the rules for dividing a business interest are a bit different from those regulating the division of other assets, courts will still attempt to determine whether a business was acquired before or during the marriage. If it was established prior to the marriage, then it may be considered separate property, although this is not always the case, as courts will also assess:

  • Where the funds to open and run the business originated; and
  • How each spouse contributed to the business.

If one spouse established a business, but the other invested marital funds after the wedding, which resulted in an increase in income, the property may still be considered marital property and so must be divided by the court.

Business Valuation

When a court determines that a business interest is a marital asset, it will look to the company’s value before determining how it will be divided. Finding the value of a business can be complicated and usually requires the parties to work with forensic accountants, real estate appraisers, and business valuation experts. During the valuation, experts will assess the worth of tangible assets, such as company equipment, real estate, inventory, accounts receivable, and financial assets, as well as intangible property, including patents, copyrights, contracts, trademarks, trade secrets, and goodwill.

Once a court receives a valuation, it will attempt to divide the property fairly, which could result in:

  • Both spouses remaining partners and continuing to operate the business;
  • One spouse buying out the other spouse;
  • The spouses operating separate aspects of the business; or
  • Selling the business and dividing the proceeds.

Being represented by an experienced attorney can make all the difference in determining which of these options is chosen by the court.

Call Today to Speak With a Sterling Heights Divorce Attorney

If you are going through a divorce and own a business with your spouse, you may face unique issues during the property division process. Please contact Iafrate & Salassa at (586) 263-1600 to learn more about your options.

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