Martial property is divided in a divorce based on your local family law rules and equitable presumptions. When you begin your divorce, you will be asked to complete financial disclosure requests in which you identify all your assets, including business interests. Whether your business assets can be categorized as separate property, not subject to division, depends on a few factors. Generally, however, if you own business, or part in one, the interest in that business may be divided between you and your spouse by the court. There are options to get around the division of your business assets.
Valuation and division of marital property
When you divorce, the court will decide or accept the agreement of the parties as to how much marital property is worth and how it is divided. While it is relatively easy to calculate the fair market value of homes, vehicles and significant assets, it can be more challenging to determine the value of business assets. Shares and tangible assets may be measured, and intangible assets such as intellectual property and projected revenue can be valued. Coming to an agreement on valuation can be a significant process in the divorce. If necessary, public adjusters for business interruption claims may be able to help.
Buying out your spouse’s interest in the business
Dividing marital property including business assets can require offsets in value for assets that are not divisible. If your business assets subject to division in the marriage are $1,000,000, you may owe your spouse $500,000 cash or equivalent liquid asset in lieu of the actual assets or shares in the business. In many cases, the offset amount can be paid to the spouse from a retirement account or a greater share of the equity in the marital residence or similar property.
Pre-and post-marital agreements for people with business interests
The best way to prevent conflict is to come to rational agreements when everything is going well. Instead of contemplating divorce, consider that the marriage could end for other reasons. Deciding what is fair and what the couple reasonably expects of one another makes sense.
An agreement about business assets and termination of the marriage can be done before the marriage in a premarital agreement or anytime after the marriage in a postnuptial agreement. In many cases, people who never expected to, can end up owning assets in a business after being married many years.
If you have a business attorney, they can work directly with your family law attorney, like a divorce attorney Collin County, TX trusts, to help you with an agreement with your soon to be or current spouse. In the event of divorce, the attorneys should also work with one another to protect you and your rights.
Thanks to our friends and contributors from Scroggins Legal for their insight into business and divorce.