Personal resources are at risk during a divorce. Any marital property is subject to division as spouses separate their lives. Spouses either negotiate directly with one another to resolve asset distribution issues or they take the matter to court. A family law judge can review an inventory of assets and debts to help arrange a fair and reasonable settlement.
A business or professional practice represents years of investment and may be the main source of income for one of the spouses. Retaining the company may be critical to a spouse’s financial recovery after divorce. Business owners contemplating divorce or responding to service from a spouse often worry about protecting their companies.
How can business owners avoid damage to their companies during the property division process of the divorce?
With an accurate valuation
Determining what different assets are worth is an important part of the property division process. A business can be incredibly difficult to accurately value. Organizations acquire a variety of different resources and financial obligations that can impact what they are worth.
Business owners may need help selecting the right valuation method to use to fairly estimate the current value of the business. In some cases, they may need to do a deep dive into their financial records if the business is partially marital property and partially separate property.
With an uncontested arrangement
Litigated property division proceedings are not ideal for those with complex, high-value assets, such as an interest in a business. Giving a judge control over those resources can lead to unpredictable and unsatisfactory outcomes. Those who aim to preserve specific resources when they divorce often need to find ways to settle property division with their spouses.
If a business owner agrees to certain concessions, they may be able to retain sole ownership of the company and avoid needing to withdraw equity or liquidate assets to compensate their spouse. Allowing the other spouse to retain certain valuable property or taking responsibility for more marital debt can both be ways to balance out a company’s value when negotiating property division matters in a complex divorce.
Reviewing marital financial records with a skilled legal team can help business owners begin planning for a complicated high-asset divorce. With the right approach, protecting the company is an achievable divorce goal.