- Second Saturday Wake County Divorce Workshop - https://www.secondsaturdaywakecounty.com -

Dividing a Business During a Divorce

Going through a divorce is stressful. You must set up new living arrangements, decide child custody, and divide assets and debt. If one or both partners own a business, that’s one more element to manage.

Dividing a business can be confusing and tedious. After all, a house is easy to appraise and then sell. Presumably, you or your partner want to keep the business going even after the divorce. We recommend you seek out a lawyer’s expertise; he or she can advise you based on your situation. However, here are some starter points to consider.

Who Owns the Business?
If Partner A bought the business before marriage or used his/her own money separately to invest in, purchase, or start the company, it’s considered separate property. However, if Partner A bought the business or started it during the marriage and/or used joint money, the business is considered marital property.

Further, even if Partner A used his/her own money to start the business, Partner B may have contributed financially at a later date or added labor, again making it marital property. Or, Partner A might have used money shared by both spouses to improve the business, again meaning Partner B has some interest. Again, it’s best to work with an attorney to first determine whether the company may be considered a marital asset [1].

Valuation of the Business
Assuming the business is a marital asset, the next step is to get a valuation. While an attorney may do this in some cases, he or she will likely try to value it higher or lower based on his/her client’s desires. For example, if Susan owns a business, her lawyer might argue it’s not worth as much so that her ex-spouse John doesn’t get as much payout. You might seek the services of an Accredited Senior Appraiser [2] (ASA) or a Certified Business Appraiser (CBA) to obtain a fair valuation.

How to Divide a Business
Once the value is determined, three methods are most common among couples when splitting a business.

There are various pros and cons associated with all three methods that you and your spouse should consider before making a final discussion. For more answers about various topics of your divorce, check out our blog [3]. You can also register [4] for our next workshop to ask a lawyer, a financial adviser, and a therapist directly.