There is an old adage in Michigan Divorce and Family Law cases. “You do not want your ex as a business partner”. However, in a recent Houghton Circuit Court case, that is exactly what the trial court ordered. On Appeal, the Michigan Court of Appeals address the issue if a divorce court can force you to stay in business with your ex spouse.
In the case of Richards v. Richards, in lieu of ordering the husband to pay the wife a lump sum for her share of the martial assets, the trial court ordered the husband to continue to pay the mortgage on the wife’s home. The wife did not want to rely on her ex to pay the mortgage as he had a history of substance abuse. While not a typical business relationship, the Court of Appeals reasoned that the requirement was akin to ordering the parties to stay in business after their divorce.
When the court ordered the husband to pay wife’s mortgage in lieu of a lump sum it forced her to stay in business with her husband without her consent.
Another issue raised by the wife in this case concerned the value of husband’s business. However, as neither party presented evidence as to value, the Court of Appeals struggled with this issue as the burden of proving a reasonably ascertainable value rested on the parties. Since neither party submitted evidence regarding the business value, it was problematic. However, the Michigan Court of Appeals determined that the trial court “clearly erred” in calculating the value of the marital estate because it did not explain the decision. . . ” and vacated the property award.
The trial court’s decision requiring the parties to “stay in business” after the divorce by requiring the husband to pay the wife’s mortgage was addressed by the court by relying on another case:
“Every divorce case must be evaluated on its own merits. However, it would be a rare divorcing couple who would benefit from a judgment that requires them to maintain an ongoing business relationship.”McDougal v McDougal, 451 Mich 80, 91 n 9; 545 NW2d 357 (1996).
The trial court’s requirement that the parties stay in business together after divorce by ran afoul of this finding.
In its decision, the Michigan Court of Appeals ordered the trial court to reevaluate the marital estate and determine a new method to compensate the wife for her share.
In sum, there is a reason why people divorce which is typically the same reason why you should not stay in business with your ex spouse after divorce.
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By: Daniel Findling