Property division is often one of the most hotly contested processes during
any divorce, and the likelihood of disagreements between divorcees only
increases when a valuable asset, such as a business, is on the line.
Today, we're exploring how businesses are handled during the property
division process, so you know what to expect from your own divorce as
you move forward.
How Do Courts Handle Businesses During Property Division?
If you or your spouse owns a business (or you own a business together),
the first order of business in your
property division case will be determining exactly how much that business is worth. This
process called "asset valuation" helps the parties and the court
work towards an equitable outcome during property division.
Typically, both parties work with their lawyers and a third-party financial
professional specializing in asset valuation to determine how much the
business is worth. If each party determines the business is worth a different
amount, they typically work together to compromise, or the court will
establish a value for the business through litigation.
Once the business's value is established, the parties can either choose
to work together and distribute the business out of court or litigate
the property division in the courtroom.
If the parties want to handle the distribution out of court, they must
work together to reach a compromise and then sign an agreement stating
the terms of the property division. If the parties litigate the process
in court, each presents their case to a judge (or is represented by their
lawyer), who then makes a decision the court deems equitable on behalf
of the parties.
There are a few common outcomes in business property division cases:
- One party buys out the other. If one party owns a majority of the business,
they may be able to buy their soon-to-be-ex out of the business to continue
operating it themself.
- The parties continue as co-owners. In situations where parties are amicable
with one another, they can continue to operate the business as co-owners.
- The parties split the business. If each party wants to continue owning
the business, they can split it and assign a new brand and name to each business.
- The parties sell the business. If the parties can't reach a resolution
that allows the business to continue being owned by one or both of them,
they can sell the business.
- The parties dissolve the business. Under certain circumstances, the parties
can choose to dissolve the business entirely.
During property division, whether the revenue from a business counts as
separate or marital property is sometimes a point of contention. Often,
courts do distribute the revenue from a business among parties equitably,
considering income earned from the business during the marriage as marital property.
At Arnold Law Group, APC, we'll work with you to help you achieve an
equitable outcome in your property division case.
To schedule a consultation with our team, contact us online
or via phone at {F:P:Sub:Phone}.