When parties get divorced, the marital property and debt of the parties have to be divided. In states where equitable division is the law (which is the vast majority of states), this requires that martial property and debt being divided in a just manner when considering all the factors.
In a lot of cases, the value of the martial property and debt can be a real issue. After all, if you don’t know what the marital property and debt is worth, how can you divide it in a just manner? This is particularly true the more marital property and debt that exists.
One martial asset that can substantially increase the complexity of a divorce is where the parties own a business. In some divorces, a business can be one of the largest assets owned by the parties. In many of these cases, the parties may have put considerable time, money, effort and labor into growing the business.
Then, when a divorce takes place, all kinds of problems. For example:
1.) What is the business worth? This is a critical question in divorces and hard to value in many cases. Ultimately, the fair market value of the business will probably need to be examined unless the parties can stipulate to a value. But this can be easier said than done.
2.) If both parties take part in the business itself, the parties will have to examine whether the parties can continue operating the business together? Or they may have to look at one of the parties would be better to sell their interest?
These are just a couple of issues that can come into play when the parties own a business and are getting divorced. There are many other issues as well, including but not limited to whether there is goodwill attached to the business, whether an individual owns a majority or minority interest in a business or whether there is a key person relative to the business.
For these reasons, it is vital in many cases to enlist the help of a business valuator in a divorce to ensure a proper valuation is obtained. It is also important in many cases to begin this process early in a divorce case to ensure that parties can engage in meaningful settlement negotiations or be prepared for trial.
If you are going through a divorce and own a business, Stange Law Firm, PC can help. You can contact us at 1-855-805-0595.