When Business Owners Divorce

If divorce is on your mind but you are worried about much more than the marriage itself—it may be because you own a small business, and you don’t know what will become of it in a divorce. You have all kinds of questions:  Will you have to share a portion of the business with your spouse? Might you be forced to liquidate and give half of the profits away? How might that affect your future? A divorce attorney who is familiar with exactly this type of scenario can answer these questions, and more.  At The Law Office of Hasson D. Barnes you can be sure you’ll get the guidance you need moving forward.

Will the Business be Shared? 

In Maryland the courts require the equitable property division or all marital property.  When it comes to businesses, the court must consider an array of issues when weighing how to address those interests in a divorce:

• In the event the business was formed or acquired during the course of the marriage, it would most likely be considered marital property, even if you’re the one who was involved in daily operations.
• If the company was run by you and your spouse together each party would likely have a claim to some portion of the business. In some cases, one person might be forced to buy out the other, either over time or in a lump sum. Another possibility would be to liquidate the company and split the net value between you.
• If the business was inherited, or if the funds to start it were inherited or gifted to only you, it could be considered non-marital property—meaning your spouse would have no claim to it (with certain caveats related to your spouse’s contributions to the family at large).
• If the business belonged to just you prior to the marriage, it might be considered separate property, with a few stipulations similar to those above. The court will have to weigh the value of the business at the time you got married, in addition to any contributions made by your spouse to both the business and to the family over the course of the marriage.  In the event, for example, that your spouse subsidized the business or took care of other family obligations to free you to run the business, they would probably have a claim for some portion of the company. In this situation the business might be viewed as partly non-marital property and partly marital property.  The aim of the court will be to provide an equitable outcome for both spouses.

Determining the Fair Value of the Company 

To calculate the net value of the company forensic accountants who are accustomed with this sort of thing may be hired to scrutinize a number of factors, including:

• Company financial statements;
• Tax documents;
• Existing Inventory;
• Overhead costs, from wages and insurance to rent and utilities, etc.;
• Receivables in relations to payables.

Each of these contribute to an understanding of the company’s value, in addition to the company’s location, reputation, and the longevity of the company. A forensic accountant could be retained by either spouse, or the cost can be split between both partners.  Your divorce attorney will likely have someone in mind that they’ve worked with in the past. In some circumstances, the court may appoint an investigator at the request of you and/or your spouse.

Your Aggressive Attorney 

Any divorce has its own tricky issues to negotiate.  If yours involves a personal business, you’ll need an aggressive and ethical attorney dedicated to protecting your interests.  At The Law Office of Hasson D. Barnes that is exactly what you’ll get.  Contact our Baltimore family lawyers for a confidential consultation.

Source:

peoples-law.org/marital-and-non-marital-property-maryland