Does The Division Of Assets In A Divorce Become Complicated If One Or Both Parties Own A Business?
The division of assets in a divorce becomes more complicated when a business is involved. In most cases, an attorney will be needed in order to help identify what portions of the business are marital. Marital portions of the business will need to be valued, which will generally require an expert. If both parties want the business, it will have to be determined whether the parties are willing to remain business partners. If one party doesn’t want to stay on as a business partner, then they would be paid their share in the value of the business, and their spouse might keep the business.
How Is The Value Of My Business Evaluated When It Comes To Divorce?
Typically, an expert will determine the value of a business. We have connections to many specially-trained experts who know how to use an array of tools for properly valuing businesses. The additional step and cost associated with hiring an expert for this purpose can be avoided if both parties agree on the value of the business, but this is not common.
If I Own My Business With Other People, How Might My Divorce Impact Their Share?
If one spouse owns a business with other people and without the involvement of their spouse, then the business itself might not be divided in the divorce, but awarded only to the spouse who has the interest in the business. However, if the business was started during the marriage, then it may be considered a part of the marital estate. Under such circumstances, the business would be valued and the marital portion would be divided, but the business would not likely be transferred.
Does It Matter If I Owned My Business Before Or During My Marriage When It Comes To The Division Of Assets And Debts In A Divorce?
If a divorce case involves a business, the first step will be to determine if it is part of the marital estate. If the business was started prior to the marriage by one party and the other party didn’t have any active role in improving the business, then it would likely be considered a non-marital asset and not divided.
However, if it was started during the marriage or the other spouse contributed significantly to the value of the business, then the increase in value from the time of marriage to the time of divorce may be subject to division by the courts. Differentiating between marital and non-marital assets can become very complicated and include several steps.
How Does The Division Of Assets And Debts Change If Both Parties Own A Piece Of The Business?
If the parties own the business together, they may decide to continue operating it jointly. If so, they might consider drafting a partnership agreement. If the parties do not wish to continue operating the business jointly, then one party would have to make a claim for the business. Depending on the circumstances, one spouse might have a better claim for the business than the other spouse. For example, if one spouse was more involved in running the business or has expertise that’s essential to the success of the business, then they may have a better claim for keeping the business moving forward. However, the other spouse would likely be entitled to half of the value of the business. The value of a marital business is determined by subtracting the debts of the business from the assets of the business.
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