Dividing marital assets during a divorce is never simple. When a couple in Michigan has financial ties to a business, the divorce becomes more complicated, and the business itself may be affected. However, some steps can be taken to avoid the impact of a divorce on a company or an individual’s earnings.
How a business is impacted by divorce will depend on several factors. For instance, Michigan is an equitable distribution state. This means that the court will decide how marital property will be distributed. Marital property is defined as all assets and income either spouse has acquired during the marriage. This can include stocks, bonds, and money in savings accounts. Any shareholder interest in a business will fall under this category.
One way to minimize the impact of a divorce on a business is to put either a prenup or postnup into place. This can prevent problems further down the line by spelling out what exactly will happen if the marriage ends in divorce. For instance, if both spouses have a governing stake in the business, a prenup or postnup will spell out exactly how a person’s financial interest in a business will be managed in the event of a divorce.
There are other steps that a spouse can take to protect a business from the possibility of divorce. One method is to keep family assets separate from the business. In other words, avoid using the family home as collateral for a business. This can avoid confusion later regarding the division of assets. The business can also be protected through a trust. A trust creates a barrier of separation between a business owner and the assets belonging to the business. A whole life insurance policy can help cover the cost of a divorce settlement without directly affecting the business itself.
If no preventative measures were taken, and a couple must divide the business assets as dictated in the divorce settlement, there are still options. The business can be sold and the assets divided, or one spouse could take more of the marital property, such as the house, while the other person takes the business assets. Lastly, a payment arrangement can be made. An attorney with a background in complex divorce cases and property division can answer questions regarding business assets and explore options with someone who may be facing a divorce that includes business interests.