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Handling the family business in a Michigan divorce

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More money, more worries is a truism that often applies when it comes to divorce. Couples with valuable assets face the problem of dividing them fairly under Michigan's equitable distribution laws.

Under equitable distribution, courts divide marital property based on what would be most fair to both parties. While this may present less difficulty when dealing with money in a bank account, what happens to assets that are not easy to apportion? If you own a business with your soon-to-be-ex, you may wonder about your options.

Plan ahead

Some couples address family business dispositions in prenuptial or postnuptial agreements. However, even if you have such a document, circumstances may have changed since its drafting that make its provisions no longer fair. For example, one of the spouses may have since contributed a disproportionate amount of effort or funds. This spouse may try to renegotiate the terms or contest them in court. While courts tend to uphold provisions in a valid prenuptial agreement, they may overturn or modify them under certain circumstances.

Divide or buy out

One way to divide an asset is to sell it and split the value. Few people want to take this route for their family company, since most would rather keep the business. Another option is for one spouse to buy out the other's interest. In either scenario, it is important for the spouses to get an accurate and fair valuation they can both trust.

Leave it alone

In some cases, the spouses want to each retain half of the ownership and continue working together. While some people can make this work, there is a large risk of personal tensions taking over and ultimately damaging the business.

Negotiate

Another issue to consider is that engaging in a court battle over the business may damage it as well. While the two owners continue to fight in court, neither can devote sufficient time and energy to actually running the operation. Effective negotiation can help you explore options that work for you and also benefit your business.

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