• 22
  • November
    2011

In a prior post about business and divorce, we began a two-part discussion about how to get through a divorce and handle a family business. We left off by advising that you know what kind of state you live in when it comes to property division. Do you live in a Community Property or Equitable Distribution State?

For those in Colorado, this is an Equitable Distribution State. Any property that is deemed marital property is not automatically divided in half between parties. A court looks at different factors and comes up with what it thinks is equitable, or fair. But, with regards to business, what is considered marital property?

What can be judged as marital property when it comes to a business depends on a couple's specific situation. Did one person own the company before the marriage, or did the couple start the business after they were married?

Generally, what an individual owned before a marriage is considered their own separate property. Their partner won't get their hands on that after that divorce. So whatever the business brought in before the marriage would be the property of the previous sole owner. The accumulated value of the business following the marriage, however, would be considered marital property and divided based on what the couple agrees to or what the court thinks is fair.

Of course, division of assets is more than figuring out what will go to whom. It's about figuring out exactly what there is to divide. An experienced divorce attorney is a necessary component of this family law process, but it's also important to seek the help of a valuation expert. He would be responsible for determining the actual worth of the business and, therefore, let you move forward with figuring out the value of the assets that you are dividing.

Divorce can be an emotional and financially complex process. This only scratches the surface of the points and options related to handling a family business with regards to divorce. An experienced divorce attorney should explain the various options available to divorcing parties and help them find the end result that is right for them and their businesses.

Source

Forbes: "Five Steps a Woman Can Take to Help Her Family-Run Business Survive Divorce," Jeff Landers, Nov. 15, 2011