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Dividing A Business In A Divorce

For many divorcing couples, the most substantial asset to be divided is a business owned by one or both of the spouses. The value of this asset, not to mention the emotional component involved in family-owned businesses and businesses that individuals built from the ground up, means that this is often a source of contention. Knowing the rules of property division as they apply to businesses can be beneficial.

Businesses And The Tenets Of Equitable Distribution

While there are many nuances involved in the process of dividing a business in a divorce, starting with the process of business valuation, the division of a business ultimately follows the same equitable distribution tenets that apply to all other assets. The rules of equitable division call for a fair, but not necessarily equal, division of marital assets. Determining an equitable division of assets requires looking at a wide range of factors, from the length of the marriage to each spouse's financial situation.

There are many options as to how a business might be equitably divided, including:

One spouse keeps the business. Frequently, the spouse who founded or who operates the business may retain ownership. The other spouse may then receive a greater share of other assets in order to achieve a fair balance. This may be referred to as a buy-out, as one spouse is essentially buying out the other's interest in the business.

The business is sold. The business may be sold and the value may be divided between the two spouses. Again, the value will be divided equitably, but not necessarily equally. This option can be challenging due to the time and work involved in selling a business.

Both parties continue to operate the business. It is possible for both spouses to maintain ownership of a business and to share in its profits. Of course, this scenario is only ideal when spouses are on amicable terms and able to work together.

An attorney experienced in dividing a business in a divorce can help a business owner understand all of the available options and pursue the one that makes the most sense for his or her situation.

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