Dividing a Business in a Divorce Settlement

 Posted on December 00, 0000 in Division of Property

According to the latest numbers provided by the U.S. Census Bureau, married couples share ownership 3.7 million businesses in this country. When couples who own a business together have a good working marriage, that positive relationship usually carries over into their business as well. But if the marriage begins to erode and the couple files for divorce, it can be disastrous for the business, especially when that business becomes part of the divorce settlement.

The assets of the business become part of the marital estate that will be part of the divorce settlement and are subject to property division, just like the couple’s marital home, personal bank accounts, stocks, etc., and can involve complex negotiations.

The first thing that needs to be done is to determine the actual value of the business. There can be a great difference of opinion on the value dependent on whether or not spouses share equal partnership in the business or not. If one spouse owns a larger share of the business, he or she will likely come up with a lower value of the business than the spouse who owns a lesser share. For this reason, it’s best to hire an independent appraiser to come up with the total value of the business.

It is also important to understand how local laws look at the “goodwill” of a business when determining its value. Personal goodwill is the skills, abilities and relationships with customer and vendors that an individual brings to a business. Enterprise goodwill comes from the business itself, as a single entity.

A decision will also need to be made on what each spouse’s role will be after the divorce. Whatever decisions are made, it is critical that each role is clearly defined in the final agreement in order to avoid disagreements in the future which could jeopardize the business.

If you and your spouse own a business and are considering a divorce, contact an experienced Aurora divorce attorney to make sure that your receive your fair share of the assets in the marital estate.