What Happens to Our Family Business After Divorce?

 Posted on April 11, 2025 in Divorce

Asset division can be a complex part of divorce. Everything from real estate and businesses to financial accounts and debts can be subject to division. However, there is no guarantee that you will lose all or even part of your company. Working with a Michigan asset division attorney ensures that you understand all legal options when dividing property. Each case is different, but a basic understanding of the laws that govern these cases in Michigan is a good place to start.

Is a Business Separate or Marital Property?

Assets and debts are categorized as separate or marital property during divorce proceedings. If the business belonged to one spouse before marriage and was kept separate from combined finances, that spouse may retain full ownership. The same is true if it was inherited or gifted to one spouse or protected in a valid prenuptial agreement. 

Your business could be considered marital property, making it available for division, if any of the following apply:

• You started the business during your marriage.

• You invested in the business with shared funds.

• Both spouses invested labor into the business to create growth.

• Your spouse’s name was added to the ownership documentation.

• Assets belonging to the business commingled with marital assets.

Sometimes, a company can start as separate property and increase in value during the marriage, potentially making all or part of the business a marital asset.

Do You Need a Business Valuation When You Get a Divorce?

If your business is up for division, having it professionally appraised is advisable. The valuation process will tell you the company’s market value by analyzing its total health. The appraiser will look at financial documentation and market conditions to present a final value you can use during the division process and help you determine how you would like to divide the company.

How Can You Divide a Business in a Divorce?

If your business is marital property and subject to division under Michigan law, there are multiple ways that you can equitably divide it. These include:

• One spouse can buy out the other spouse’s share of the business to become the sole owner.

• Together, you can sell the business to a third party and split the money you make.

• You can keep the business intact and agree to own and operate it jointly.

• One spouse can be the sole operator and agree to give the other spouse a percentage of earnings.

• You may establish an agreement that allows either spouse to buy out the other under certain future conditions.

Selling the business and splitting the proceeds is the most time-consuming option, and co-ownership is the least common. The best choice will depend on the type of relationship you have with your ex-spouse.

Contact Our Oakland County, MI Divorce Attorneys Today

Figuring out what to do with a family business during divorce proceedings does not have to cause contention. At Elkouri Heath, PLC, we have served clients for over 23 years and understand the emotional obstacles inherent in asset division. Call 248-344-9700 today to schedule your free consultation with our Northville, MI divorce asset division lawyers. We offer compassionate and customized representation to help alleviate the stress of the divorce process.