Business Valuation Attorneys in Ypsilanti, Michigan
Divorce is a complicated process. There are countless variables that can impact the way a relationship is dissolved. An already emotional and complex problem can be compounded by the addition of owning a business. In some cases, one spouse owns the business while the other works separately. In other cases, they may work together to build and prosper from a business.
Sometimes, one works at the business while the other takes care of the home. Whatever the case, a business will most likely be taken into consideration when distributing assets. Unless the business was agreed to be separate property, it will most likely fall under marital property. If you are facing divorce and have a business involved, it is important that you have an experienced legal team on your side. To schedule a consultation with the attorneys at Collis, Griffor & Hendra, contact our office today.
Is Your Business Marital Property?
One of the challenges of getting a divorce when a business is involved is determining whether the business is considered marital or separate property. Marital property is any asset or debt acquired during the marriage or separate property brought into the marriage. Separate property is any asset or debt acquired before the marriage or agreed as separate property through a written agreement. Furthermore, any inheritance or gifted assets acquired during the marriage is usually considered “separate” when a marriage ends. When evaluating a business, things can get complicated. If the business started as separate property and commingled assets blur the lines or if one spouse works to support the other’s vision of owning a business, the court may consider it marital property. If the business is considered marital property, it will go through the process of valuation similar to any asset deemed marital property. This means that the court will assign a monetary value.
Assigning Value to a Business
If the business is considered marital property, it will be assigned a value. Financial experts will investigate records and bookkeeping related to the business. A judge may mandate an inquiry into the practices and expenses of the business in order to paint a clear picture of the value of the business. This becomes a complicated matter when a business is sensitive to the circulation of confidential information. Furthermore, if discrepancies are found, there is a high likelihood of them being reported to the Internal Revenue Service.
How can you protect your business?
When you are joining in a marriage that is complicated by the ownership of a business, you should always consider the future. A very common way of protecting a business from the prying eyes of the government is to have a prenuptial agreement that keeps the business as separate property. Though it is hard to consider a prenuptial agreement at the beginning of a marriage, it may be in everyone’s best interests. Another way to protect your business is to consider drafting a shareholder agreement that allows for a couple to agree to terms if the marriage does not work out. The shareholder agreement will detail the mechanism for valuing each spouse’s interest in the company, assign ownership if the marriage doesn’t work, and limit the transfer of ownership if things don’t work out.
Contact a Michigan Business Valuation Attorney
At Collis, Griffor & Hendra, not only do we boast an experienced legal team, but we are also proud to have financial experts on hand that can help you determine the value of a business and protect it in your divorce. Divorce is an already complicated and emotional process and when a business is involved, it becomes much more complex. If you are about to go through a divorce with a business involved, you should contact an attorney as soon as possible to protect your business and your interests. Contact Collis, Griffor & Hendra today to learn how we can help.