Division of property is a major challenge in all but the briefest marriages or those between two people of very modest means. The average divorcing couple in Rochester has valuable marital assets like a home, retirement savings and the contents of bank accounts to figure out how to divide.
But when you or your spouse owns a business — especially if you own it together — things can get really complicated. An ownership stake in even a small business could be worth more than your house, the most valuable marital asset to divide up for many couples. And there’s a good chance that the business is a marital asset on which both spouses have a claim, even if only one spouse actively works for the company. This is not guaranteed, however, and could be one of the issues raised during property division negotiations.
Other things to consider
Besides determining whether the business ownership stake is marital property or a non-marital asset belonging to one spouse only, things that you need to know are:
- A reasonably precise value of the business. Before you and your ex can decide what to do about the business, you need to know what it is worth. Business valuation is a complex process in which accountants and other experts appraise the business’ assets and liabilities to determine what it would theoretically sell for, which is called its fair market value.
- Your goals for the business. Do you want to keep 100 percent of the firm or get bought out for a reasonable amount? Or do you and your ex expect to continue owning the business jointly? There are several options, including selling the business and splitting the proceeds, though it’s common for one party to negotiate a buyout and keep it intact.
Determining what to do with a business as part of a divorce is a complex process, but with experienced legal guidance, it is possible to reach a fair and sustainable solution.