In Georgia, a divorce involves more than just the termination of a marriage. Specifically, if you and/or your spouse own a business, dissolving your marriage could seriously impact how and whether it is able to operate in the future. This is because a business may be subject to equitable division during your divorce.
To learn more about your legal rights and options regarding the ownership of a private business, contact a skilled asset division attorney. One of our lawyers can assist you with dividing a privately owned business in Buckhead during divorce.
A business or business interest can be equitably divided during the property division phase of a divorce case. If, one spouse started their own business during their marriage, such as a corporation (whose shares are not publicly traded), professional practice, partnership, or LLC, the business and its ownership interest would qualify as a marital asset and be subject to division.
Moreover, if an individual owned or held interest in a business before marriage and its value appreciated during the marriage as a result of either spouse’s efforts or labor, this appreciation may be divided upon divorce. It is important to keep in mind, however, that if appreciation occurs exclusively due to “market forces,” it does not qualify as a marital asset that is subject to division.
In general, if a business is small, is owned exclusively by one’s spouse, and has few corporate assets, it may not be worth trying to make a marital claim to the business. Conversely, if there is substantial value in a spouse’s business, or their interest in a business, a person should retain a qualified expert witness to examine its financial and business records and to learn the value thereof, plus any “enterprise” goodwill as of the date of the marriage as well as the date of the trial or settlement.
Unless the spouses began the business together and are able to demonstrate that they can continue to do so following a divorce, the business or the specific ownership interest therein will most likely be awarded to the owner-spouse. However, the present value of the spouse’s specific ownership interest (in the case where they may be one of several other partners or owners) or the business, as of the date of the final hearing or settlement, can be offset against other marital property. Alternatively, a court may award “business alimony” to a non-owning spouse, which is a form of spousal support meant to offset the owning spouse’s award of the shares.
Another complicated issue is determining income for the business owner in order to set alimony or child support obligations. Both parties’ incomes are vital for these calculations, but the income of a business owner may not be clear cut.
One way to estimate a business owner’s income is to look at what they declared in taxes in the previous year. Experts may also need to weigh in on the future likely earnings of the owner.
It will be important to get an accurate valuation. If the owner attempts to hide income, the consequences can be devastating. It is advisable to let an experienced Buckhead attorney review a spouse’s business income, because different businesses illustrate earnings in different ways.
A lawyer with a significant amount of experiencing handling divorce cases involving business owners in Buckhead can be an invaluable ally when one or both spouses own or have an interest in a business or professional practice. Our team will work with you to perform or challenge a business valuation to help you achieve the outcome you seek. Call today to schedule an appointment with one of our team members.