Splitting assets in a divorce is a complicated and lengthy process. But what about a business? Depending on who owns the business and how much it is worth, even more complicated. All the details of separating a business cannot be covered in one blog post, but it can cover some general questions that people may have about the future of their business.
Establishing Who Owns It
In a divorce case, in order to split up assets equally, it has to be established what is separate and what is marital. Separate means that it was owned by one person before the marriage and therefore will be retained by that same person, or if it was bought after the couple was married and therefore it needs to be split evenly. If a couple started a business after they were married, then the business interest will belong to both people evenly, and you must go from there. But in more complicated situations, sometimes a business can be started by a spouse ten years prior to getting married, but after the couple is married and they share finances, then whatever money was invested into the business from the personal savings can be given to the other spouse in court. For instance, let’s say that Mark owns a business ten years before he met Jessica. While married, Mark invests $10,000 of their personal savings into his business and it grows exponentially. Now when they are getting divorced, Jessica is entitled to half $10,000 even if she doesn’t own the business itself.
Splitting Up Assets
There is a reason that a lawyer is needed to help with the divorce process. Trying to value and split assets can almost be impossible without financial and legal help. The husband may be a partial owner of a company and then when he gets divorced, the judge might order him to pay out for all their personal assets including half of his worth in the company. Now, what if the husband knew that the company was going to be sold soon and he knew that his shares of the company were going to be much more valuable in the near future. If the divorce goes through before the company sells and the wife didn’t know about it, she might have a reason to sue.
Trying to value what a company is worth is also a hassle. How much is a desk worth? Or the tables and chairs? How do you account for the fact that it has depreciated over time? Who gets to own the business after the divorce is settled? All these questions can only be answered by a lawyer on a case by case basis with a thorough dive into all the couples finances. These legal proceedings take time and money but it is better for everyone if they are done properly. The truth is there is no short cut to getting a divorce, but getting an experienced lawyer to walk you through the steps and will fight for what is yours will help expedite the process.