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Valuing the marital estate is often difficult. It is even more challenging when one or both spouses acquire a business during the marriage. You would likely need valuation experts and must hire an attorney.
Since the business was acquired during the marriage, it would not be subject to a prenuptial agreement. The two parties would not have a predetermined solution for handling the business. Everything depends on the arguments you present and the solution you negotiate with the other spouse.
A business acquired during the marriage is the same as any other property in that it is considered a marital asset. The business would be subject to division between the spouses in either a settlement or a lawsuit. However, the court would not expect the two spouses to each own an interest in the business after the conclusion of the marriage. Thus, the solution would reflect that only one spouse may remain in the business after the divorce.
There Are Challenges When Valuing the Business
One of the first considerations is how the business is valued. The spouse who may retain their stake is interested in a lower valuation, while the selling spouse wants the business to be valued as highly as possible. Each spouse would hire a valuation expert and forensic accountant to support their position. If the spouses cannot agree on a valuation, the court must decide whether to listen to one expert or split the difference between the two.
Determining Each Spouse’s Share of the Business
Then, the court would determine what share of the business each spouse would receive. The court considers each spouse’s contribution to accumulating marital assets. If one spouse worked intensively to build the business, they could be entitled to more than half. However, the other spouse’s contributions would also be considered, especially if they enabled the other spouse to build the business.
Dividing a business would require a factual analysis of the realities of the business and the marriage. Each spouse would want to prove their contribution to the business, whether through their work or enabling the other party to do their work. Chances are that each spouse could receive a significant share of the business, even if it is not dividing the business 50/50.
How the Business Is Divided?
Both spouses would rarely continue to retain their stake in the business. Instead, there are two likely outcomes:
- One spouse would continue owning the business and buy out the other’s interest. The purchase would be at the valuation agreed to by both of the parties.
- The business would be liquidated, and each spouse would receive a payout for their stake.
If one spouse receives a significant share of the business, it is also considered in the context of other marital issues. For example, if a spouse receives a large cash payment, the court may be less likely to award them alimony. If they receive spousal maintenance, the amount could be less.
The matter will go to the judge if you cannot negotiate a compromise. However, you may have to litigate your case if the other spouse is not taking a reasonable position in settlement negotiations.
Contact Our Metuchen Divorce Lawyers at Wiley Lavender Maknoor, PC for Legal Help
Contact our Metuchen divorce lawyers at Wiley Lavender Maknoor, PC at the outset of your divorce case. We offer free consultations. You can schedule one by calling us at 732-494-6099 or by contacting us online. Located in Metuchen, New Jersey, we serve clients in Middlesex County, Monmouth County, Union County, and Somerset County.