Does A Divorce Become More Complicated If Both Parties Are Business Owners?
When both parties to a divorce are business owners, the divorce will be more involved in terms of the division of assets. In general, the court does not favor parties continuing to be in business together after divorce, so if the business is in only one spouse’s name, then that spouse will have to buy out the other spouse with a lump sum or monthly payments. Interestingly, a business can be considered both an asset and an income stream. This can complicate the divorce process but is not something that can’t be worked out.
How Is The Value Of My Business Evaluated When It Comes To Divorce?
The first step in valuing a business is to determine the valuation date, which is the date of the filing of the divorce. A small business or sole proprietorship can potentially be valued by two family lawyers. For more complex businesses with lots of employees and/or locations, hiring a forensic accountant who specializes in business valuations is usually recommended. The forensic accountant will review the assets, income, and liabilities in order to determine the value of the business.
If I Own A Business With Other People, How Can My Divorce Impact Their Share?
The first step in valuing a business that is owned by multiple parties is to determine the marital portion of the business. If one spouse owns 25 percent of the business, then 25 percent of the business will be divided between the two spouses, and the 75 percent that is nonmarital will not be a part of the divorce.
Does It Matter If I Own A Business Before And During My Marriage With Respect To The Division Of Assets In A Divorce?
If possible, the business can be valued on the date of the marriage and on the date of the divorce. Assuming those numbers can be calculated, the premarital portion can be subtracted before the division of the marital portion. However, this doesn’t always work; depending on the complexity of the business, the actual value of the business might be divided at the time of the divorce.
How Does The Division Of Assets And Debts Change If Both Parties Own A Piece Of The Business?
Debts and assets of the business can be divided between the two parties, but only one party will end up remaining in the business. If the two parties are the only members of the business and they don’t want to keep it going, then the whole business can be sold and the proceeds divided between the parties. At the end of the day, each party is going to walk away with half of the assets and half of the liabilities, regardless of whether the business was owned by one or both spouses.
Can I Sell My Business During A Divorce?
An individual can sell their business during a divorce, but they must be transparent with the other side in doing so. The other party to the divorce will know how much the business is being sold out so that they can ensure that they will receive a fair amount of assets from the sale.
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