4 Steps to protect your business during a divorce in Michigan

On Behalf of | Oct 10, 2022 | Family Law |

A divorce can be very stressful. It affects every part of your life and can be more complex if you own a business. 

Remember, marital property in Michigan, including businesses, are subject to division during a divorce. This means that you could potentially lose business ownership to your soon-to-be ex. Fortunately, there are a few steps you can take to avoid losing your livelihood and your marriage all at the same time. 

Complete a thorough and accurate valuation

The first and most important step in protecting your business is determining how much it’s worth. This is essential because the court will require that you have a business valuation report on hand. In addition, the court will consider various factors, including expenses, assets, location, nature of the business, and more, to determine its value. 

Negotiate with other marital assets

To avoid co-owning your business with your spouse, you can use other marital assets to negotiate and keep the business. For example, if you own a vacation home, you can offer it to your spouse in exchange for the business. This will help ensure that you remain in full control of the business.

Limiting your spouse’s involvement

This may sound cruel, but limiting your spouse’s involvement is one of the best ways to reduce the claim they have on your business. This will be ideal if you know you’ll file for divorce later. Keep in mind that the more your spouse is involved in your business, the more likely the court will award them a cut of your profits. 

Pay yourself a fair salary

As a business owner, it’s important that you pay yourself a decent salary. If you plow back more profit to grow your business, your spouse can make a case that they deserve a share of the business. You can easily avoid such a situation by investing more money in your household. 

Divorce cases are almost always complicated, and a business on the line can make the entire process even more stressful. In the event of a divorce, ensure that you protect your business and future by considering the above steps.

 

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