Valuable assets have a tendency to complicate divorce proceedings. When spouses share resources worth tens of thousands of dollars or more, those assets create opportunities for conflict during divorce. Retirement savings and real estate are often sources of conflict during divorce proceedings.
If there is a business included in the marital estate, that can also lead to significant disputes between spouses. Whether the spouses started the business together or one spouse took over their family business when their parents retired, the company is likely to complicate the divorce process.
What do spouses need to do when their marital estate contains a business or professional practice?
Determine the business’s value
Spouses need to have a general understanding of what business assets are worth if they hope to fairly address them during divorce negotiations. There are different valuation methods that work for different types of companies.
Calculating the fair market value of the company is the first step toward addressing it during divorce. From there, it may be necessary to determine if the business is partially or completely part of the marital estate. The date when the spouses acquired or started the company, as well as the investments made during the marriage, can influence what portion of the company’s value is potentially subject to division during the divorce.
Consider a variety of solutions
Perhaps the spouses started and ran the company together. They might be able to negotiate arrangements that allow them to continue working cooperatively to run the company even after they divorce.
If one spouse runs the business, then they might hope to retain the company outright. There may be several ways to achieve that goal. They could liquidate certain assets and use the funds to compensate the other spouse for their interest in the organization.
They could use other marital assets to balance the scales, given the value of the company. They could take responsibility for more marital debt or agree to provide ongoing financial support for the other spouse as a means of achieving a fair settlement.
If spouses can reach an amicable settlement through mutual cooperation, they can set terms that they both agree are appropriate. If they cannot agree on terms, then the matter may require the review of a family law judge. At that point, the judge’s ruling on the matter, rather than the spouse’s wishes, ultimately determines what happens with the business.
People who run businesses and those married to business owners can anticipate a relatively complicated divorce process, regardless of whether they negotiate or litigate. Learning more about the law and the various options for addressing a company can be beneficial for those concerned about business assets during a divorce accordingly.