Property division among divorcing couples is often contentious. When one or both spouses own a business, the process becomes far more complicated, and there is more potential for disagreement.
The attorneys at our firm often represent business owners and their spouses in divorces. We apply our deep knowledge of divorce law, understanding of relevant tax considerations, and business acumen to ensure your property settlement is fair.
The Business May Be Marital Property
People who own businesses when they marry often have premarital agreements segregating the business from marital property. In most cases, courts will uphold these agreements.
When a business was started during the marriage, and there is no marital agreement designating it as one spouse’s sole property, the business is likely marital property. Marital property must be divided according to the laws of the state where the couple is divorcing.
In some cases, a spouse who contributed to a business the other spouse owned before marriage may be entitled to a portion of its value. Working with an experienced divorce attorney is essential in these cases, as determining the value of the non-owning spouse’s contribution can be time-consuming and controversial.
Be Prepared for Delays
Couples must disclose all their holdings to each other and to the court when they divorce. Establishing an accurate present and future value for a business usually requires opinions from business valuation experts. The business owner’s accountant and tax professionals often must provide substantial documentation.
Attorneys for the other spouse will verify the information the business owner provides. Often, this requires engaging forensic accountants and others to review the documentation.
Compiling and verifying the information can cause long delays in property settlement negotiations. The delays may be even more marked when the couple cannot negotiate a settlement and must take property division issues to trial.
A Marital Agreement Can Ease the Process
When the owner of a business or professional practice anticipates divorce, they can take steps to protect their interests and speed the property division process. One of the most effective strategies is to negotiate a marital agreement.
A marital agreement can establish each spouse’s interest in the business, if any. When a spouse may have a claim the business, the spouses can put a value on the claim in the marital agreement.
Spouses negotiating marital agreements must make financial disclosures to each other, and each must be represented by their own attorney. Negotiating a marital agreement in anticipation of divorce may require significant investments of time, energy, and legal fees. However, creating a marital agreement before filing for divorce allows the spouses to negotiate in a less contentious atmosphere.
Work With a Skilled Divorce Attorney If You or Your Spouse Own a Business
Owning a business can significantly complicate the property division process in a divorce. Having savvy legal representation is critical to ensure a fair settlement.
Work with an attorney with substantial experience in complex property division negotiations. Reach out today to schedule an intake appointment with a member of our team.
