Divorce can take a toll on you both emotionally and financially. Things can get even more complicated when the divorce involves the property division of a family business.
Learn more about how a divorce impacts a family-owned business in this post.
Is the Family Business Under Marital Property?
If the family business is considered marital property, it will be divided equally between the spouses. That way, each spouse owns half of the business. But, if you owned the business before getting married, you may be able to claim full possession of the company.
Also, if you got the business as a gift or inheritance, the court may consider the business as separate property. If this happens, your spouse can negotiate for a portion of its value as part of their divorce settlement. They can build a strong case to prove their contribution to the business.
Both spouses could choose to discuss the details of your family business outside court. Mediation can save you time since court proceedings can sometimes be lengthy. But you should still contact a divorce lawyer to represent you during the mediation process.
How Do You Value a Family Business in Divorce?
When valuing a family business in divorce, the court will consider several factors, including:
- The value of the company as it stands on the date of divorce
- The value of any assets or liabilities associated with the company
- How much money the company makes and share distribution among shareholders
If your case goes to trial, the judge may rely on the testimony of an expert witness. In such a case, your divorce lawyer may present the testimony of a financial analyst or accountant to value the family business accurately.
Ways to Structure a Family Business After Divorce
If both spouses want to keep the business, they can agree on how to run it after the divorce. They could use a settlement agreement or post-marital agreement that outlines each spouse's role and financial involvement.
These documents can also determine who gets control of certain aspects of business operations, such as hiring decisions. Depending on the agreement terms, you might work from home while your spouse works in an office setting so you don't have to run into each other during working hours.
Alternatively, if you want to keep the family business after the divorce, you can also buy out your spouse. Make sure there is enough cash available in other assets or liquidate necessary investments before making an offer.
You should work with an experienced divorce lawyer who understands what property laws apply to your case. They can liaise with a professional appraiser to assess your financial statements and determine your ownership percentage.
Contact a divorce lawyer with any additional questions.
What do family lawyers really do? Most people know that they help clients in divorce proceedings, but this is only a small piece of their job. These attorneys also help draft custody arrangements, create adoption contracts, formulate prenuptial agreements, and designate alternative guardianship of kids in situations of abuse. As you can probably guess, working as a family lawyer requires tact, compassion, and an endless drive to do good. We are passionate about the work that these attorneys do, which is why we chose to write about that work on this blog. Our hope is that in reading these articles, you will also develop an improved understanding of family law.