|Divorce and Dividing a Business
In many marriages, spouses have run a business
together. The family-owned business constitutes a marital asset.
It probably constitutes a large, if not one of the largest marital
assets. It would not be practical to require the parties to
run the business together. Typically, one party would continue
to business and the interest of the other party is bought out.
The business would be appraised and that amount is given to
the party that was bought out.
For example, if the business
was worth $400,000, the husband wanted to keep the business
and continuing running it, and the wife had a 50 percent interest
in the business, then the wife would be entitled to $200,000.
She may receive this money over time in the form of payments
or she may receive it in the form of other property. Parties
or the courts can determine the best and most equitable way
for the party to receive the money owed to it.
one party worked in the business that does not mean that the
non-working party is not entitled to receive anything. Further,
the non-working party's contributions may be compensable
as well. Perhaps one party did the books while the other worked
in the store.
Issues to Consider When Dealing
with Dividing a Business
There are numerous
issues that should be considered when dividing a business. Those
Valuation of the business.
will run the business after it is divided.
information about the business, especially if you were not
involved in running the business.
Structuring a buy
Tax issues and ramifications of dividing
Whether the business constituted marital
or separate property.
Check for hidden assets, especially
in a cash business.
In some cases, if the party who is running the business is
acting in bad faith or hiding assets, the other spouse can ask
the Court to appoint a “receiver.” The business
and all of its assets are placed into a “receivership”
and the receiver has the power to run the business for the benefit
of both spouses until a final division is made.
with the division of a business can be very complex as a plethora
of issues come into play. Parties may need to consult professionals,
such as an appraiser, an accountant, and an attorney to assist
in dividing a family-owned business in a divorce action.