Written by Jonathan Breeden
When anyone gets a divorce, they will be concerned with how the marital assets are divided. This can include the house, savings accounts, and debts. But, getting a divorce when you own a business together only elevates those concerns.
Who will keep the business? Will we have to sell the business? Will my ex continue to work with me? When your livelihood is wrapped up in a jointly owned business, a divorce can have a serious impact on your income and assets.
If you are in this situation, you need a skilled, qualified divorce attorney who can protect what you built. With offices in Raleigh, Garner, Angier, and Smithfield, Breeden Law Office has extensive experience handling jointly owned business in divorce cases and can help you find a solution that works.
A jointly owned business is a marital asset and it must be accounted for and considered in the division of assets. The first step is establishing a fair market value for the business.
You and your spouse might be able to agree on a fair value, but the most likely scenario is that the business will need to be appraised by a professional.
In general, you and your spouse will each need to hire your own appraiser. It is then up to the judge to decide on a fair valuation based on the independent reports.
The value is then added to the pool of marital assets that must be divided.
Once the business has a value, there are three options for what can happen in a divorce.
In this scenario, both you and your spouse would continue on as co-owners of the business. This is a challenging approach because you will need to continue to work together and trust each other.
It may be simpler if you agree one spouse will be the managing partner and make the day-to-day decisions.
In this situation, the business is sold. The purchase price could be divided equally among the two spouses. It could also be divided in another way, as part of the larger property settlement.
For example, one spouse might keep the home valued at $250,000. The sale price of $750,000 for the business might be divided so that one spouse gets $500,000 and the spouse who kept the home gets $250,000. In this way, they each walk away with roughly the same $500,000 in assets.
However, it can be difficult to agree to sell a business if it is one spouse’s dream and primary employment plan. It can be challenging to find a buyer in a timely way in some industries so it can take a long time to sell the business.
This is the most common scenario that occurs in divorce when the spouses own a business. Keep in mind that the term “buy out” doesn’t necessarily mean you have to come up with the cash to hand over to the other spouse in exchange for their ownership interest.
The marital assets can be divided in the same way as described above. One spouse could be granted the home, a vacation home, investments, or retirement assets equal to half the value of the business while the other spouse keeps the business.
Divorcing in North Carolina when you own a business requires a detailed financial analysis and an attorney who understands the law. The Breeden Law Office is experienced in dividing businesses in divorce and is ready to assist you.