When you go through a divorce, part of the process includes asset division. Some assets are easier to divide than others. For example, a car is easier to figure out than a business. If you have an ownership interest in a company, how do you distribute that? Will your spouse automatically get half of it?
Dividing a business during divorce is difficult and requires some careful planning. If you have concerns about what will happen to your business because of the divorce, read on to learn about your options.
Determine whether your business is subject to division.
Every situation is different, and sometimes business assets are considered separate property — not community property. Unlike community property, separate property is not necessarily subject to division in a divorce.
For example, if you owned the business prior to the marriage date, the business may be considered separate property, although profits accrued during the course of the marriage may be considered community property. If you believe your business assets are separate, talk to a lawyer about tracing those assets to their origin before the marriage.
Determine the value of your business.
If your business — or at least part of its value — needs to be divided, it is important to have an expert conduct a business valuation. This is necessary for ensuring a fair split of assets.
Figure out what to do with the business.
After you find out how much your company is worth, it is time to figure out what method you should use to distribute it. You may consider a buy-out, which is a situation in which you buy out the interest your spouse owns. If you want to do this but do not have enough cash on hand, you may consider giving your spouse other assets such as the marital home. Some spouses actually consider co-owning the business after the divorce, but this can be very difficult for obvious reasons. Another option is to sell the company and split the proceeds.
As you consider the future of your business, make sure your lawyer understands your goals and concerns. An experienced divorce attorney can help protect your rights and your financial future.