Divorce gets complicated for joint business owners. Many couples start businesses together when their marriage is relatively stable, and it makes sense for them to become business partners. But if they head toward a divorce and they jointly own that business, they have to address it during property division.
Many couples are worried that they will have to sell the business due to the divorce, and that is one potential outcome. After all, selling it converts the business into a financial asset. It is then relatively easy for the couple to split up that asset during property division, dividing the proceeds from the sale of the business.
But it is not mandatory to sell the business, and there are ways to keep it long-term. Below are two other options to consider.
Continuing to work together
For one thing, for couples who are still on good terms, they can just become business partners. Getting divorced does not mean they have to change anything with their employment situation. They can just draft a partnership agreement and keep working together. Property division is still satisfied because they both still jointly own the business.
Buying out the other person’s share
If the couple does not want to work together after divorce, it is sometimes possible for one person to buy out the other’s ownership share. They may get investors or take out business loans to facilitate this purchase. They may also agree to give up other marital assets, like investments or retirement savings.
Navigating property division
This helps to demonstrate three of the main options you have as joint business owners going through a divorce in Michigan. Consider them carefully as you look into your legal rights during property division.