Divorce is never an “easy” process, but there are some things that can make it a lot more complicated. When a business is involved, divorce and property division can get pretty confusing.
There are many different types of businesses, and it is important to understand how your business will affect your divorce. If you own any type of business, our business valuation lawyers in Minnesota can help make the process less complicated for you. We routinely work with some of the top business appraisers in the Twin Cities.
How a Business is Allocated
There is no set way that a business is allocated in a divorce. Some businesses will be subject to equitable distribution, while others may not even be part of the property division at all.
No matter what type of business you own, that business will have an impact on your divorce.
Even if you just own a small business, or are part of a larger family-owned business, your divorce will be affected. The allocation of the business during the property division will be determined by the involvement of each spouse in the business.
Here are some examples of different ways a married couple can be involved in a business:
- One spouse owns it while the other is an employee;
- Both spouses own the business together;
- One spouse owns the business and the other is employed elsewhere; or
- One spouse owns the business and the other spouse is not employed
Other issues that could impact the allocation include when the business was started (did one spouse start the business before the marriage?), and what percentage of the business is owned by either spouse relative to outside shareholders.
There are two basic steps in determining the property division of businesses: (1) determining the business ownership relative to the parties; and (2) putting a value on the business.
It is very important to get an accurate valuation of your business early in the divorce proceedings. Certified appraisers or business valuation lawyers in Minnesota will use a variety of methods to determine how much the business is worth.
Here are some of the factors considered when putting a value on a business:
- Recent sales, and sales comparisons;
- Tangible assets (property owned by the business);
- Business profits; and
- Business debts
There are many other things that our business valuation attorneys in Minnesota will consider before placing a value on the business. It will be necessary to evaluate all of the financial records of the business.
Some parties in a divorce choose to use their own accountant to value the business, but we recommend that you enlist the services of certified business valuation lawyers in Minnesota. Their appraisal will be utilized as part of the total balance sheet.