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.
If only 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 issues include:
Valuation of the business.
Who will run the business after it is divided.
Obtaining information about the business, especially if
you were not involved in running the business.
Structuring a buy out agreement.
Tax issues and ramifications of dividing the business.
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.
Dealing 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.
|
