Divorce with a Business Involved
Any divorce is a complex, emotional, and difficult process. Divorce can be especially challenging, though, if the spouses share ownership of a business. A business is a valuable asset, and one or both spouses may be depending on that income to cover their living expenses once the divorce is complete. This can make an already contentious battle over assets that much more fraught.
If you are going through a divorce and you own a private business with your spouse, a well-informed divorce attorney will speed the process along and ensure you are seeking your fair share of the assets. The attorneys at Kurtz & Blum, PLLC are highly skilled at handling divorces with complex assets, such as a shared business. We will advise you on your best options and negotiate aggressively for your rights.
Call Kurtz & Blum, PLLC today or contact us online to schedule a consultation.
How Are Business Assets Divided in a Divorce?
The first step in dividing any business assets in a divorce is to determine whether the business is a shared marital asset or separate property. If the business was acquired during the marriage, it likely is considered a shared martial asset. If one spouse owned the business prior to getting married but grew the business during the marriage, it could be considered a shared asset unless that spouse put protections in place ahead of time, such as a prenup.
If the business is determined to be a marital asset, then the next step is to determine how much it’s worth. This can be tricky, as it may be in the interest of one spouse to overvalue or undervalue the business to their advantage. Both spouses may wish to hire their own expert to appraise the business. This person is usually an Accredited Senior Appraiser, Certified Business Appraiser, or a Certified Public Accountant with an Accredited in Business Valuation designation.
If both spouses hire their own appraiser and the valuations don’t line up, it will be up to the judge to determine which appraiser’s claim is more accurate and reliable. This can greatly increase the time and cost of your divorce.
Once the business’ value has been determined, the next step is to figure out who will own the business going forward. There are three general approaches to dividing up a business between spouses.
Buying Out the Other Spouse
One spouse purchasing the other’s interest in their shared business is the most popular method to divide up the business. This is especially true in cases when a special license is required to operate a business, such as a doctor’s office, and only one spouse has the license.
While one spouse buying out the other can be an easier way to divide up a shared business, it does depend on the buyer having enough cash to make the purchase. If a spouse does not have enough cash, he or she may be able to obtain a commercial business loan or other outside financing to make the purchase. Another option could be to negotiate with other assets that must be divided, such the spouse’s stake in the home.
Our knowledgeable divorce lawyers at Kurtz & Blum, PLLC can walk you through all the options of a business buyout if this is the route you want to take.
Selling the Business
If one spouse buying out the other isn’t a viable option, the couple may decide to sell the business to a third party and split the proceeds. Assuming neither partner wants to continue operating the business, this can be a good option that generates some extra income for both spouses.
Selling a business to a third party comes with its own potential complications, however. It may take time to find an interested buyer, and the offer may not match the valuation you have from your appraisers. Additionally, selling the business to an outside party would have different tax implications compared to one spouse buying out the other.
Former spouses could choose to keep running a business together after getting a divorce, provided their separation is amicable and they can get along. It may be that you and your former spouse wish to maintain your professional relationship, even if you’re now living separate personal lives. The exact arrangement will be up to you and your spouse, but there are multiple options available to you.
Former spouses can keep operating the business directly together, or one spouse can take over primary management while the other spouse takes a percentage of the profits. For former couples who take this approach, it’s important to put any agreement down in writing.
How a Lawyer Can Help with Your Business Divorce
Figuring out what to do with a business during a divorce adds many complications to what is already a complicated process. An experienced business divorce attorney will know the ins and outs of the relevant laws, what potential tax complications you may face, and how to keep the process moving smoothly. In the event of a contested divorce, an attorney can also help you find the right appraiser to get the best valuation possible for your business assets.
Contact Our Raleigh Divorce Lawyers Today
Trying to negotiate the division of business assets in a divorce by yourself is a recipe for disaster. Protect yourself and your assets by hiring one of the skilled Raleigh divorce attorneys at Kurtz & Blum, PLLC. We have extensive experience serving clients in Raleigh and throughout North Carolina, and we will act as an aggressive advocate on your behalf. We will make sure that no matter what happens, you have all the information and resources you need to make the best decision about what to do with your business in the event of a divorce.
Call our office today or contact us online to schedule a consultation.