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How Will the Court Divide Your Small Business If You Divorce?

June 20, 2020

Divorce can disrupt virtually every aspect of your life, from your relationship with your children to your holiday plans and customs, to your personal financial goals and your progress toward them. If you are an employee of a company, you might feel like work is the only thing in your life that is going well. If you are an entrepreneur and own your own business, divorce can jeopardize your business, too. In determining equitable distribution, the court will need to find out a lot of financial information about your business. It might even award part of the ownership of the business to your ex, especially if you and your ex ran the business together. The worst-case scenario is that, after you have spent years building a reputation for your company, the court will award the entire company to your ex. If you own a business and are getting a divorce, the family law attorneys at Iwanyshyn & Associates in Greater Pittsburgh can help you keep the business you have worked so hard to build.

Valuing Your Business

During the divorce process, the court assesses the value of each separate and marital asset you and your spouse own. Valuing a business is more complicated than valuing a bank account, house, or personal vehicle, for example. The profits and losses of a business are in flux from one year to the next, and the assets owned by the business can appreciate or depreciate in value from one year to the next, not to mention that businesses sometimes carry a lot of high-risk debt. The biggest challenge to valuing a business is valuing its intangible property, which is to say, its reputation. If you run the business by yourself, its reputation is your reputation, and it is virtually impossible to divide that. A divorce lawyer can help ensure that the court is valuing your business fairly.

Equitable Distribution of the Family Business

If you and your spouse each own a percentage of the business, the court might have each spouse keep his or her respective share of the business after the divorce. If you do not wish to be your ex’s business partner after your divorce, you can buy out your ex’s share by paying your ex a lump sum. Some former couples decide to continue being business partners even after their marriage ends.

If You Get to Keep the Business, Then What?

If the court awards you 100 percent ownership of the business, it might be in exchange for your ex getting 100 percent ownership of another valuable asset, such as the marital home. One of you might still need to pay the other a lump sum to even things out. If you owned the business before the marriage but your ex contributed to its success while you were married, you might have to pay your ex a lump sum to compensate them for their contribution to the business.

Iwanyshyn & Associates Helps Small Business Owners Deal with Divorce

If you own a small business, you have the same right to equitable distribution as anyone else going through a divorce. Contact Iwanyshyn & Associates in Greater Pittsburgh & Western PA about your divorce case. 🡺 412-419-3448