There’s a lot to think about with respect to assets when moving through the divorce process. From your family home to your motor vehicles, from your bank accounts to your retirement accounts, there’s no shortage of details that deserve your attention.
As you prepare for the divorce process, also take into consideration if either or both of you are a business owner. If you are, it’s one more thing you need to think about.
Is the business separate or marital?
This is the first question you need to answer. Generally speaking, here’s what you need to know:
- If you started the business or purchased it before the date of marriage, it’s separate property.
- If you started the business or purchased it during your marriage with separate funds, it’s separate property.
- If you started or purchased the business during your marriage with joint funds, it’s marital property.
In the event that your business is considered marital property, it’s subject to division. And for that reason, it has the potential to be a sticking point during the divorce process.
What’s the value of the business?
This is where things really get tricky. Without an accurate valuation, it’s a challenge to determine how to divide the asset.
Here are some questions to answer as you attempt to place a value on the business:
- What is the annual revenue of the business?
- What could you sell the business for?
- How much money is currently in business bank accounts?
- Does more than one person own the business? Do you have partners?
- Is there any valuable equipment or supplies associated with the business?
Even if you can answer these questions on your own, it’s best to opt for a professional business valuation. This gives both individuals peace of mind.
Also, keep in mind that a business doesn’t necessarily have to be split in divorce. For instance, if you want to maintain your full stake in the company, you can offer your imminent ex-spouse other assets in exchange.
It’s never easy to divide a business in divorce, so it’s critical that you begin to plan for this early in the process.