Factors to consider when dividing up a business during divorce

| Nov 8, 2018 | Uncategorized

Divorces are often difficult to resolve. They may be even more so if you have complex assets such as retirement or investment portfolios, stocks or a business to divide up. Many husbands or wives don’t take too well to having to give up a portion of their pension or company to their ex, especially when they haven’t put in the hard work to build up its value.

When a divorcing couple is unable to reach an agreement about what to do with a business one of the spouses owns, then family law judges rarely rule that the couple should co-own it. They may, however, order that the husband or wife primarily running the business buys out their ex’s share in it. A judge may allow a spouse to garnish or place a lien on profits or order a buyout to ensure this occurs.

If the business was set up prior to the marriage and was included in a prenuptial agreement, then it may be possible to keep a spouse from laying claim to it during the divorce.

For companies with multiple partners, a divorce clause may also be included in its bylaws. If there is one, it may stipulate that in the event a partner’s marriage ends, the other owners can buy out the divorcing partner’s shares. They can simply repurchase them once the divorce has been finalized.

In instances where a spouse does have to buyout their company or has a lien placed against it, the valuation of it is important. Depending on the type of business it is, it may be valued in one of three different ways.

If it’s valued using the asset approach, then the actual value of the plant, inventory and equipment will be taken into account. An income valuation is based on a company’s historical profits and what it’s forecasted to do in the future. A market value takes into account what the company could be sold for if it were put up for public sale today.

When you have valuable assets such as investment portfolios, retirement accounts, income properties or a business, the worst thing that you can do is sell them quickly as you rush to divorce. A Kissimmee property division attorney can help guide you in splitting up your assets with your ex so that you don’t end up giving up more than you have to.

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