Who Gets What in a Divorce for Business Owners?
One contentious issue during most divorce proceedings is the division of marital assets. In divorce cases involving business owners, the conflict may extend to business assets, especially if they’re worth a significant amount. Dividing business assets during a divorce can be complex, so you should fight to protect your rights and future security.
Skilled family law attorneys in Alpharetta can help you understand the guidelines courts use in handling such cases. They can also evaluate your case and help you prepare for the proceedings so that you know what to expect.
Division of Business Assets During a Divorce
Business assets are much the same as other marital assets but can be more complex to divide during a divorce. Georgia is an equitable distribution state, and assets are divided fairly, not necessarily equally. Division of business assets in a divorce settlement depends on their material value.
Therefore, a business with little material value may not be worth trying to claim. However, each case is different, and courts must decide on a case-by-case basis. Courts must consider various factors, including the ownership and value of the business. Working with experienced property division lawyers in Alpharetta can be crucial in ensuring your rights and assets are protected.
Which Spouse Owns the Business?
Georgia doesn’t automatically categorize all assets spouses acquire throughout the marriage as community or shared property. Properties started before and during a marriage are subject to equitable division. If one spouse started a business before entering the union, it should remain their property after the divorce.
A judge can make an exemption if the business grew throughout the marriage due to the contribution or involvement of the other spouse. In such a case, the company may be subject to division as other marital property. A business started by one spouse during the marriage may also be considered marital property and may be subject to division.
Determination of Business Ownership
A judge may look at the business title in determining business ownership, but that isn’t determinative. For example, a spouse’s name on the business bank account, title to the business equipment, or lease agreement isn’t indicative of exclusive ownership, operation of the assets, or indebtedness by that spouse alone.
Courts also consider other non-monetary indicators in determining business ownership and a spouse’s contribution to the investment. For example, one spouse’s contribution toward childcare or household while the other worked at the business can be a fact-finder into the proportion of ownership by the “marital unit.”
How is Business Valuation Done During Divorce?
Business valuation can be lengthy and expensive. The party that seeks to evaluate the business must first obtain all the business financial records that show the business value at the time of marriage and divorce. The process may be complicated, but skilled property division attorneys in Alpharetta can guide you.
A business is a separate entity and may object to producing sensitive financial information unless added as a party. These records must be obtained before an expert witness or business appraiser begins their analysis. Once the financial records are available, the expert will make an opinion of the present fair market value of the business based on various possible approaches.
Experienced Alpharetta property division lawyers can oversee this process and evaluate the records to protect your interests and rights. They can qualify the witnesses to ensure you deal with people who understand the business valuation process. They can also present their opinion in court to fight for what is rightfully yours.
The Role of Business Valuation in Asset Division
The value of privately owned businesses isn’t publicly established, but spouses can have the company appraised by professional business evaluators. Some commonly used methods in calculating the business value include:
- Asset-based valuation, where the total liabilities are subtracted from the total assets
- Market-based valuation, which entails comparing the selling prices of comparative businesses in the same industry
- Discounted cash flow, which entails establishing the present value of a business’s future cash flow while accounting for risk
With the help of skilled property division attorneys in Alpharetta, you can negotiate with your spouse an agreed-upon value depending on the appraisals. Alternatively, the judge can ascertain the most credible valuation method or call for an independent valuation.
Division After Valuation
Once the valuation is obtained, the business assets are divided between the spouses in one of three ways:
- One spouse (usually the one who wishes to retain business ownership) buys the other out of the business by refunding them their share capital and other benefits.
- The business is sold, and the proceeds are split.
- The spouses remain co-owners with carefully defined roles and rights.
If you and your spouse can’t agree on the most favorable settlement option, the court may give a final order regarding what will happen to the business. Consult skilled family law attorneys in Alpharetta on the risks or benefits of each option to help you settle for the most favorable option.
Protect Your Rights During Business Asset Division Today
If you’re going through a divorce involving complicated and high-value business assets, protecting your interests and rights can be challenging. Division of business assets during a divorce is complex and time-consuming. Fortunately, skilled Alpharetta property division lawyers can provide the legal counsel and representation you need during this difficult time.
Hecht Family Law hosts passionate and experienced family law lawyers who understand the complexities of property division during divorce. We can evaluate your case, review your marital and business assets, and help you know what to expect during the divorce proceedings. Call us at (470) 291-5342 to schedule a case strategy session with Attorney Hecht today!