| Dividing the Family Business
In many marriages, spouses have run a business together.
The family-owned business constitutes a marital asset.
It probably constitutes a large, if not one of the largest
marital assets. It would not be practical to require
the parties to run the business together. Typically,
one party would continue to business and the interest
of the other party is bought out. The business would
be appraised and that amount is given to the party that
was bought out.
For example, if the business was worth $400,000, the
husband wanted to keep the business and continuing running
it, and the wife had a 50 percent interest in the business,
then the wife would be entitled to $200,000. She may
receive this money over time in the form of payments
or she may receive it in the form of other property.
Parties or the courts can determine the best and most
equitable way for the party to receive the money owed
to it.
If only one party worked in the business that does not
mean that the non-working party is not entitled to receive
anything. Further, the non-working party's contributions
may be compensable as well. Perhaps one party did the
books while the other worked in the store.
Issues to Consider When Dealing with Dividing a Business
There are numerous issues that should be considered
when dividing a business. Those issues include:
- Valuation of the business.
- Who will run the business after it is divided.
- Obtaining information about the business, especially
if you were not involved in running the business.
- Structuring a buy out agreement.
- Tax issues and ramifications of dividing the business.
- Whether the business constituted marital or separate
property
- Check for hidden assets, especially in a cash business.
Dealing with the division of a business can be very
complex as a plethora of issues come into play. Parties
may need to consult professionals, such as an appraiser,
an accountant, and an attorney to assist in dividing
a family-owned business in a divorce action.
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