3 Tips for Protecting Your Small Business in an Oakland County Divorce

 Posted on February 08,2022 in Divorce

Small business owners in Michigan spend many years of never-ending work to get their business running successfully, often taking great risks in the hope they will pay off. For business owners, the specter of divorce threatens not only their personal lives and family stability, but their business’s future as well. 

Small business owners are understandably concerned about how to keep their business intact during divorce. Because businesses are often run with the help of a spouse and profits occur during the marriage, at least part of the business is likely to be considered marital property. If you are considering divorce and want to protect your business, here are three tips that may be useful. 

Sign a Prenuptial Agreement

The best option for protecting a business in a divorce is a prenuptial agreement. While business owners who are already married cannot make a prenuptial agreement, a postnuptial agreement contains many of the same protections as a prenuptial agreement. Spouses can determine how to handle the business during divorce while minimizing negotiations and conflict by thinking ahead and protecting themselves with a post-marital contract. 

Determine the Business’s Value

Before a business’s value can be split between spouses, a court needs to know exactly how much a business and its assets are worth. There are several different ways for valuing a business, and which method you use will be affected by the kind of business you have and your goals in the divorce. Make sure you use a business valuation professional who is familiar with your line of work, and consider getting a second opinion. 

Trade Other Assets to Keep Your Spouse’s Share

Sometimes, the only way to keep your business intact is to “buy out” your spouse’s share of the value using other marital assets. This can be risky because it may leave you without savings or retirement funds and, depending on how successful your business is likely to be in the future, this may or may not be worth it. Try talking to your spouse and finding out what their financial priorities are. If your spouse contributed to the success of your business, they might just want to be compensated fairly for their time. Mediation or other methods of alternative dispute resolution can help with this process. 

Contact an Oakland County Small Business Asset Division Lawyer

The skilled Novi small business asset attorneys with Elkouri Heath, PLC have experience helping clients position themselves for a favorable outcome during divorce. With a strong eye for detail and a personalized client approach, we can help you understand how divorce might impact your business. Call us today at 248-344-9700 to schedule a free case review. 

Sources: 

http://www.legislature.mi.gov/mileg.aspx?page=getobject&objectname=mcl-chap552 

https://www.forbes.com/sites/frawleypollock/2019/02/19/everything-you-need-to-know-about-protecting-your-business-in-a-divorce/