If you or your spouse have an ownership interest in a business or professional practice, that interest is an asset that must be addressed in your divorce. If the ownership interest was acquired during the marriage with community funds or effort, that interest will likely be considered a community asset. If the business or business interest was obtained prior to marriage, the interest will be the owning spouse’s sole and separate property. However, even if the interest is sole and separate, the increase in value that occurred during the marriage due to the effort of one or both spouses can, in some instances, mean your spouse is entitled to compensation. Under either scenario, the business value will need to be determined.
In some cases it is appropriate to engage a professional business valuator to analyze various aspects of the business interest to determine a value. These valuators are also able, through their review of the business’s financial documents, to render opinions on the actual income being earned by the employed spouse, which may be different than shown on income tax returns. This information is critical for calculating child support or spousal maintenance.
Once a value is determined, a method to buy out one of the spouses will need to be determined. This can be accomplished a variety of ways, including a lump sum buyout, payments over time, or transfer of other assets of equal value to the non-owning spouse.
You should rely on your legal counsel to guide you in obtaining a value for your business interest. The goal, as in any divorce case, is to reach an equitable out of court settlement. For ways in which resolution can be achieved in any case on any issue, see Our Services.
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