One of the most complicated aspects of divorce is the division of marital property. If you are an entrepreneur or run a professional practice, this part of the divorce process becomes even trickier.
Here is what your need to know about the key issues affecting the division of your business.
Is the business community property?
Community or marital property refers to the assets that either spouse acquires during the marriage, whereas separate property is anything that a spouse owns before getting married. The latter is usually not subject to division during the divorce proceedings.
If you owned your business or practice before your nuptials, it most likely will not fall into the community category. However, increases in value after the marriage began may be marital property, and any comingling of joint funds could further complicate the issue.
How is the value of the business determined?
If all or part of your company is community property, you will need to seek a valuation of the business. Valuations are complex because often the value of a company is a combination of tangible assets and intangible qualities. Two separate appraisers could come up with very different numbers.
In addition to determining the value, you should also carefully consider what you want from the business going forward. For example, do you want to continue running your company as you were, or would you rather sell the business and divide the profits? Knowing what your goals are will help you make the right decision for your future.