Splitting up your assets can be one of the most difficult parts of a divorce, especially if you own a business. You put a huge amount of time and effort into your business, and you might be worried about what will happen to it following your divorce. This is likely one of, if not the most, important assets you own, but how will your divorce affect your involvement in the business?
Being a business owner and going through a divorce can be extremely complicated, and you have a lot on the line. At MHPS, our property division attorneys can work with you during the asset distribution process.
Are Businesses Considered Marital Property?
First, you might be wondering if your business is even considered marital property. It can sometimes be hard to determine what is your personal property and what is marital property. In some cases, an asset you think is your separate property, such as a bank account, can really be considered marital property in a divorce. If your business is under your name but you started it after you were already married, it could still be marital property.
While assets owned before marriage are often not considered marital property, there are some cases when a business could be. Even if one spouse owned a business prior to getting married, if their spouse made contributions that helped it increase in value over the course of the marriage, some of it could be subject to equitable division.
How are Businesses Divided in a Divorce?
As Tennessee is an equitable division state, marital property is not split 50/50. This means how a business is divided in a divorce will vary depending on the circumstance of those involved when it’s considered a marital asset. Property in a Tennessee divorce is divided as fairly as possible, which depends on various factors, such as each spouse’s earning capacity, age, and the duration of the marriage.
A few ways a business may be divided in a divorce include:
- Buy-Outs – In many divorces, one spouse buys out the other’s interest in the business. A spouse may buy the other’s interest with cash or other marital assets.
- Co-Ownership – In some cases, spouses may be able to continue to share interest in the business if they still have an amicable relationship. When this is possible, ex-spouses can become co-owners and share the responsibility of running the business.
- Selling the Business – As many divorcing couples sell their home and divide the profit made from the sale, some couples also sell their business. This is a good idea for divorcing couples who don’t have the means of buying out their spouse and can’t continue to run the business together.
Courts will take various factors into consideration when dividing a business. For example, it’s important to look at the level of involvement each spouse had in the business. One spouse may have owned the business prior to marriage, but the other played a bigger role in running the business and adding value to it. Another factor that may be considered is each spouse’s ability to make a comparable income without the business.
Put Your Trust in the Property Division Attorneys at MHPS
Determining which spouse will get the family business in a divorce is often not straightforward, and everyone’s situation looks a little different. This is why it’s essential for you to have an experienced property division attorney on your side to represent you during your divorce. At MHPS, we know how important it is that you have someone representing your best interests during this process.
Contact us today for assistance during your divorce.
