No matter how a business is owned, it may be considered Marital Property in a divorce.
Whether you own a business alone, with partners, or with your spouse there are important issues to consider in determining whether the business itself is marital property. There are many things to consider depending on whether your started your business before or after your marriage and whether the business is a marital asset or whether the increase in value during your marriage is a marital asset to be divided. It is important to retain a divorce attorney to assist you as you navigate this complex issue.
What Happens to a Shared Business in a Divorce?
When you own a business or multiple businesses with your spouse this may lead to a complicated situation if you separate. Not only are you dealing with the emotional issues related to the end of your marriage….you may be concerned about how this will affect your financial situation in the future. The business is considered a marital asset that must be equitably divided. It is best if you have a Prenuptial Agreement that addresses the issues, but if you do not, you will have to find a resolution that provides financial security for both of you in the future.
You may both want to continue to work in the business, or you may feel that there is no way you will be able to work together since the issues that occurred in your marriage may lead to disagreements related to managing the business. You may decide it is best if one of you buys-out the other’s interest in the business. If you disagree about who will buy-out the interest of the other or if it is not financially feasible to do this, then the business will be sold. You would then need to agree on the equitable division of the sale proceeds.
Whatever you decide to do or if you are having difficulty deciding which option will work for you, it is best to have the business valued by a valuation expert who may also be a certified divorce financial analyst. The expert will factor in the contributions each spouse has made to the business whether these are financial contributions or not. Once you have this information it is easier to make a decision as to the best resolution about your business.
What Happens to a Business You Own Solely or With Partners in a Divorce?
You may own a business solely or with partners, but your spouse is not involved in the business at all. The business is still considered marital property for purposes of the equitable division of marital assets. Just as in the case of owning a business with your spouse you will need to have an expert value the business. This will be part of the division of marital assets just as your home and bank accounts are. If you have a Prenuptial Agreement it will address the issues related to your business and if you separate the process will be much simpler and less stressful.
Your DC divorce attorney will work with you and the financial expert to attempt to find an amicable solution.