Business and Divorce Lawyers
Experienced Divorce Attorneys Can Protect Your Business
Divorce for a business owner can be particularly challenging. When looking at a business in a divorce, the court must determine if the business is martial or partially marital, determine the value of the marital portion and equitably divided the marital portion of the business between the parties. This analysis is extremely challenging.
Is the Business Marital?
If the business was formed or acquired during the marriage, it is likely a marital asset, regardless of the form of business ownership or which party owns the business. However, in some cases, a business may have been established before the marriage, but increased in value during the marriage. This means that some of the value of the business may be martial. The analysis of whether a business or a portion of the business is martial is a fact specific inquiry that should be done by an experienced attorney.
What is the value of the Marital Portion of the Business?
Once we determine that some or all of the business is marital, we must determine the value. Typically this requires a business valuation by a qualified professional. Book values, tax values and balance sheet values are typically not sufficient. For businesses formed or acquired before the marriage, we must also determine the value of the business both at the time of the divorce and at the time of the marriage. Further, if there is an increase in the value, we must determine the cause of the increase in value. A passive increase due to market or other general economic conditions are generally not considered marital. However, an increase of value due to the labor of one of the parties is usually considered marital.
Distributing the Value of the Marital Portion of the Business
While courts won’t typically try to physically divide a business, it can order the owner to pay the non-owner spouse a portion of the value of the business to achieve equitable distribution. Our attorneys have the experience to analyze your case and pursue your interest, whether you are the owner or non-owner spouse of the company or business.
Additional Factors of Business Divorce
Not only must your attorney consider the above analysis, but the attorney must also be familiar and prepared to address the following possible issues related to businesses in divorce:
- taxation of the business
- determine the source of appreciation of the business (passive appreciation vs. appreciation based on efforts of the parties)
- determine the institutional good will vs. personal good will
- value a minority interest in the business
- address deferred compensation of the business
- analyze the possible ways to distribute the business
Don’t assume that you can determine the value of your business or the business of your spouse. Some companies, while very lucrative due to one party’s labor, have no actual value in a divorce because the monies made by the company or business come directly from the labor or goodwill of the owner of the company. Other companies may have substantial value, even if they have not turned a profit recently. Finally, some companies or business may have a value that is hard to determine due to market conditions, minority ownership interests or other industry specific reasons.
Don’t settle for less than what you deserve. Make sure you have a divorce attorney who can help you evaluate the company or business at issue and protect your interest in it. Contact the Law Office of Silverman, Mack & Associates to discuss the issues related to your small business today.