It is never easy to divide up assets when a couple divorces in Massachusetts. However, when one or both partners own interests in a closely-held business, the task becomes far more complicated, both financially and emotionally.
It is a good idea to take special care with issues that can potentially cause problems right from the start. Working with a divorce lawyer who is familiar with the challenges of helping a business owner in divorce can make the process a lot more efficient and effective.
One Partner’s Business Can Still Be Treated as a Jointly-Owned Marital Asset
One of the most difficult concepts for some partners to grasp is that even if they owned a business before they got married and even if their spouse never worked for the business at all, that spouse may still own a share of that business. Part of the value of the business can be treated as marital property that must be divided equitably in divorce. Equitably means “fairly” rather than equally. Judges will take a variety of factors into account when deciding how to divide property.
Your attorney could present evidence to show why a spouse who didn’t participate in a business should be entitled to a greater or lesser share of that business. That spouse may have worked another job to enable the business owner to focus on building the business. Or that spouse may have taken care of the home. On the other side of the coin, a business owning spouse could claim that all money invested in the business came from funds owned before marriage and that business finances were kept strictly separate from the couple’s personal finances, and that the non-participating spouse did little to support the couple’s home life or personal finances.
Partners Can Develop Their Own Plan to Divide the Business and Other Assets
A divorcing couple does not need to wait for a judge to determine how their assets should be split up. They are free to develop their own plan, and so long as it is not grossly unfair, the court is likely to approve it if both parties agree to the terms. Handling a business in this manner can allow both partners to obtain assets that mean most to them, and it can make it easier to continue business operations. It also saves considerable time and money, and can keep the divorce process from turning into a contentious battle.
Before dividing assets, it is a good idea to have the business professionally valued by a neutral third party, preferably one that specializes in business valuation. There are a variety of intangible factors such as brand recognition and good will that can be challenging to value accurately. It is also important to take account of liabilities and even potential liabilities.
If a couple executed a pre or postnuptial agreement specifying how the business would be handled in divorce, then those terms should be honored.
Work with a Divorce Attorney Who Understands How to Handle All the Issues When a Business Owner Divorces
A business is an asset with both financial and emotional value. While it is often best to settle arrangements for the business and other assets out of court, it is important to treat the issues with care in negotiation to avoid emotional triggers that could hamper cooperation.
At Koiles Pratt Family Law Group, we know what’s at stake when business owners divorce, and we know how to manage critical issues to get the best for our clients while preserving their peace of mind. For a confidential consultation to discuss any issues pertaining to divorce or other family matters, just give us a call.