Family businesses are often the backbone of local commerce and generational assets. These enterprises passed down through the years, carry not just financial value but also sentimental worth. But what happens when divorce disrupts the family dynamics that once supported a flourishing business?
Understanding Michigan’s marital property laws
Michigan follows equitable distribution laws when it comes to dividing property in a divorce. This means the court will aim for a fair, but not necessarily equal, division of assets. Generally, inherited property is considered separate property and not subject to division in a divorce. However, circumstances are not always straightforward.
Factors that may affect your business
If you’ve mixed your business with marital assets or if your spouse has played a significant role in its growth, things can get complicated. Several factors can influence how your family business is treated during divorce proceedings:
- When you inherited the business
- Whether your spouse worked in or contributed to the business
- If you used marital funds to support or grow the business
- The increase in value of the business during your marriage
Courts will consider these factors when determining whether the business remains entirely yours. If any of these factors apply, your spouse may have a claim to a portion of the business or its increased value.
Protecting your business interests
Proactive measures can help protect your family business during a divorce. A prenuptial or postnuptial agreement can clearly define the business as separate property. If you did not have such an agreement in place, negotiating a fair settlement with your spouse might be necessary to retain full control of the business. Additionally, you might consider hiring a professional appraiser to determine the business’s value. This step ensures that both parties have a clear understanding of what is at stake and can facilitate a more equitable resolution.
Moving forward
Handling divorce while managing a family can be a daunting task. It’s a crucial time to make informed decisions that protect both your personal interests and your family’s legacy. Seeking guidance from a legal professional may help ensure the continued success and legacy of your family business in this new chapter of your life.