Michigan entrepreneurs and business owners put an enormous amount of time, work and effort into their businesses. But what happens when a business owner divorces or goes through a significant family law event? While most people do not want to short their ex-spouse on a fair share of the assets, business owners do not want everything they have worked for to fall apart. This does not have to be the case.
Prenuptial and postnuptial agreements are often a good idea for business owners. These documents generally afford the same protections with the main difference being whether they were signed before or after getting married. Business owners can use these contracts to outline that their business is their own, separate property and as such will not be divided during divorce. Addressing added value after the start of the marriage is also smart, and many choose to limit how much their spouse is entitled to.
Although prenups are an important part of family law, not everyone is comfortable with the idea of using a contract. If business owners cannot convince their spouse to use one, they should instead focus on maintaining their business as a separate property. This includes doing things keeping business and personal expenses completely separate, maintaining clear records of business expenses and organizing documents that state the business cannot and will not be transferred during a divorce.
The goal of protecting a business from divorce is not to make it harder for an ex-spouse to get his or her fair share of assets. Instead, it is simply to preserve a business’ ability to function and thrive. However, the intersection of a business and Michigan family law can be complicated, so seeking guidance from an attorney who is experienced in such matters is usually well-advised.