If you find yourself in this situation, you may wonder about your entitlement to the business assets and whether you can claim half of it during the divorce proceedings. 

While the division of assets in a divorce varies based on individual circumstances and applicable laws, as the divorce rate in the US sits at 2.5 per 1000 population, understanding the factors that influence the distribution of business assets is essential. 

In this article, we will explore the considerations involved when one partner owns a business and whether the other spouse can claim half of it.

Community Property vs. Equitable Distribution

The division of assets during a divorce depends on the jurisdiction in which you reside. In community property states, assets acquired during the marriage are generally considered marital property and are split equally between the spouses. 

In equitable distribution states, assets are divided fairly, but not necessarily equally, taking into account factors such as each spouse's financial contributions and individual needs.

Be sure to check the rules of each state, with laws verifying if you were to file for divorce in California, Florida, or Indiana.

Determining the Business's Marital and Non-Marital Components

If the business was established or acquired before the marriage, it may be considered separate or non-marital property, and the owning spouse may retain full ownership. 

However, if the business grew in value during the marriage, a portion of that growth may be deemed marital property subject to division. Determining the business's marital and non-marital components can be complex, requiring the expertise of financial professionals and legal counsel.

Valuation of the Business

Valuing a business is a crucial step in the divorce process, as it determines the worth of the marital portion of the business to be divided. Business valuation may involve assessing tangible assets, such as property and equipment, as well as intangible assets, such as intellectual property, goodwill, and customer relationships. 

Professional appraisers or financial experts can provide an objective evaluation to establish a fair value for the business.

Considerations for Division

When considering the division of a business in a divorce, the court will assess various factors, including:

  • Spousal Contributions - The court will consider the contributions made by both spouses to the business during the marriage. Active involvement in running the business or providing financial support may be taken into account.
  • Non-Business Assets - The court will also consider the distribution of other marital assets and liabilities when determining the division of the business. A spouse may receive a larger share of other assets to balance the division.
  • Future Viability - The court may evaluate the business's prospects and profitability when making a decision. If the business is likely to face challenges or if the owning spouse is better positioned to sustain it, this may influence the division.
  • Buyout Options - In some cases, the non-owning spouse may be interested in a buyout, where they receive a fair share of the business's value in cash or other assets, allowing the owning spouse to retain full ownership.

If your former partner owns a business, the division of its assets during a divorce can be a complex and nuanced process. 

Engaging the services of experienced family law attorneys and financial experts can help ensure a fair and equitable division of assets. Ultimately, the goal is to reach an agreement that protects the interests of both parties while facilitating a smooth transition into their post-divorce lives.