Why Business Ownership Complicates a Michigan Divorce

For business owners, a divorce in Michigan introduces a layer of complexity that most people are not prepared for. The business you have built, managed, and grown may be subject to division as marital property. Understanding how Michigan courts treat business assets is essential before any negotiations begin.

At Boroja, Bernier & Associates, we have guided business owners through some of the most complex divorce proceedings in Michigan. With over 35 years of combined experience, we know where the issues arise and how to handle them with precision and care.

Is Your Business Marital Property?

The first question in any business division analysis is whether the business is marital property. In most cases, the answer is yes. If a business is your primary source of income and it has been supporting the household during the marriage, Michigan courts will likely characterize it as marital property.

Every dollar earned after the exchange of marriage vows is generally considered marital property in Michigan. Business income is no exception. The business account, the retained earnings, the equipment, the accounts receivable; all of it falls under scrutiny.

Exceptions exist but they are narrow. If you can demonstrate that the business was founded before the marriage and kept entirely separate from marital finances, you may have an argument for non-marital treatment of a portion of the value. The analysis is fact-specific and requires careful documentation.

How Is a Business Valued in a Michigan Divorce?

Valuation is often where business divorce cases become most contentious. There are several approaches Michigan practitioners use, and the right one depends on the nature and complexity of the business.

The most straightforward path is stipulation, where both parties agree on a valuation method and a value after reviewing financial records. This approach saves money and time and tends to produce results both sides can live with.

When parties cannot agree, the process moves into formal discovery. This involves requesting bank statements, tax returns, profit and loss statements, accounts receivable and payable, and any other financial documentation that reflects the business’s true performance.

In more complex situations, the parties may retain a forensic accountant or a certified business valuator to provide an independent assessment. These professionals examine financial records, assess market conditions, review comparable business sales, and produce a valuation report that can withstand scrutiny in court.

If one spouse is not involved in the business and has limited visibility into its finances, the discovery process becomes especially important. BBA Law knows how to identify what documents to request and how to analyze them to ensure nothing is hidden and nothing is undervalued.

The Buyout Option: Can One Spouse Purchase the Other’s Interest?

A buyout is often the most practical solution when one spouse wants to retain the business and the other is willing to accept a fair payment for their share. This approach keeps the business intact and avoids the disruption of a forced sale.

Whether a buyout is feasible depends on the type of business and whether the purchasing spouse has the financial ability to execute it. For businesses like car washes, retail operations, or other non-professional ventures, a buyout can be structured in various ways, including cash payments, installment arrangements, or offset against other marital assets.

For professional practices like law firms, medical offices, or accounting firms, the situation is more nuanced. If the other spouse is not licensed in that profession, they cannot simply receive a share of the professional practice in the way they might receive a share of a retail business. However, the value generated by the practice during the marriage is still subject to division, and creative solutions are often necessary.

Stock Options and Other Employee Benefits

Business ownership is not the only asset that complicates divorce for high-income professionals. Stock options, restricted stock units, profit-sharing arrangements, and deferred compensation are all treated as marital property to the extent they were earned during the marriage.

Identifying these assets is often the first challenge. Many spouses do not know the full scope of the other’s investment portfolio or equity compensation package. Discovery requests, including requests for brokerage statements, employer compensation records, and tax filings, are essential tools for uncovering these assets.

Once identified, the analysis proceeds the same way as with other assets. What portion was earned before the marriage? What portion is marital? How is that portion valued and divided? BBA Law works through each of these questions methodically to ensure our clients receive everything they are entitled to.

What Business Owners Should Do Before Filing for Divorce

If you are a business owner considering divorce in Michigan, preparation is everything. Before any legal proceedings begin, take steps to document the current state of your business finances, including recent bank statements, tax returns, accounts receivable, equipment lists, and any existing business valuations.

Understanding your financial picture clearly and completely puts you in a stronger position from the start. It also helps your attorney provide accurate guidance rather than working from incomplete information.

Business owners sometimes make the mistake of taking actions that appear to reduce the value of the business in anticipation of a divorce. These moves are discoverable and can seriously damage your credibility in court. The better approach is transparency, preparation, and a clear strategy developed with your attorney.

How BBA Law Protects Business Owners in Michigan Divorce

BBA Law approaches every business division case with the full weight of our experience and the personal attention your situation demands. We understand that your business is not just an asset on a balance sheet. It is your livelihood, your legacy, and often the result of years of work and sacrifice.

We work to protect that investment at every stage of the process, from initial valuation to final negotiation. Our attorneys are direct, thorough, and committed to giving you real answers so you can make real decisions.