Two major binding contracts between people can be twice as messy to untangle simultaneously: marriage, and business partnerships. The challenges of understanding, valuing, measuring, and dividing a business makes it one of the most complicated things that divorce attorneys encounter. Improper strategy by an inexperienced attorney can result in an unfair division of business assets and an unfavorable outcome for you.
Few things raise resentment between business owners quite like a stranger sifting through the company’s finances. Many family-owned, small, businesses have proprietary, often difficult to decipher financial records. Often, business owners prefer it that way when the business finances intertwine with their personal finances.
The first step the court takes is to determine whether or not the business is a marital asset. The next step is to determine the value of the business.
If the business was owned or operated by one person before the marriage, or is covered under a prenuptial agreement, it is usually considered part of “non-marital assets or liabilities” and may be excluded from the division of assets phase of the divorce process. However, if the married couple opened the business together, or if one person started the business during the marriage, the business is usually considered a part of the marriage assets and subject to equitable division.
If it is determined that the business is a marital asset, the court may decide to enter an order so that the business assets are partially distributed throughout the course of the divorce proceedings, before the final judgment.
Depending on your individual situation, it might be best to dissolve the business entirely or to re-establish it under new ownership and regulations following the divorce proceedings. You will need to discuss all of your possible options with your attorney throughout your entire divorce proceedings. Making different plans for the future of the business affects the details of the divorce itself - like alimony and child support awards.