A divorce will affect the finances of spouses in multiple ways. During the divorce process, spouses will need to identify all of the marital assets they own and determine how these assets will be divided. The property division process can become especially complex if either spouse owns a family business. Because a business may be one of the most valuable assets a couple owns, and it may serve as a source of income for one or both spouses, a couple will need to determine how ownership of a business will be handled going forward.
Options for Ownership of a Marital Business
A family business will be considered a marital asset if it was founded or acquired while a couple was married. If one spouse owned a business before getting married, it will usually be considered separate property. However, any increase in value for a non-marital business during a couple’s marriage may need to be addressed during the divorce process, especially if these increases may be partially attributed to efforts by the non-owner spouse or investments in the business using marital funds.
The monetary value of a business will need to be determined to ensure that it and other marital assets can be divided fairly. There are multiple methods that may be used during the business valuation process. The value of assets owned by the business may be calculated, and any business debts or liabilities may be subtracted. A valuation may also consider the income earned by the business over the past several years and the potential for growth in the near future. A couple may also consider other similar businesses that have been recently sold to estimate the potential purchase price of a family business.
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