Divorce can be a difficult time. Property division can be one of the most contentious parts of divorce, which means that tensions and conflict can run high. To find answers to how your business may be treated after the divorce, you may be searching online for a “lawyer for divorce near me.”
Asset division can get even more complicated if you and your spouse own a family business. Marie Drake, divorce lawyer and the founder of The Drake Law Firm of Golden, Colorado, explains what happens to family businesses in a Colorado divorce.
Business Ownership and Your Options
A marital property business may legally belong to one of the spouses, both spouses, or one or both spouses jointly with a third party or parties. Depending on your business structure and other factors, you may consider the following options:
- Remain Co-Owners. If you work well together as business partners, you and your spouse may decide to keep the business running as usual. Or you could stay a co-owner but pass the practical side of business management to someone else.
- Buy Out Your Spouse’s Share. Maybe your business is highly successful, but you don’t want to own or manage it jointly with your ex-spouse. In that case, you may offer your spouse a buyout and become the sole owner of the business.
- Sell the Business. Sometimes, selling the business is the best solution during a divorce. The spouses will divide the proceeds from the sale depending on an agreement or (if the spouses are unable to reach one) a court order.
To divide a business or settle on a buyout amount, you need to know the business’s value. Business valuation can be complex, so you will typically need to hire a valuation expert like a CPA. Besides the net worth of the business, the CPA’s valuation will include several factors, such as:
- Tangible assets, e.g., equipment or vehicles
- Business growth stage
- Historical performance and earnings
- Projected earnings
- Intangible assets like brand recognition, reputation, and intellectual property
Valuation can vary based on these factors, as well as by input from each spouse. For example, one of the spouses may try to minimize the business’s valuation by downplaying earning potential and brand worth. If you and your spouse disagree on business valuation, you should contact your divorce lawyer for your next steps.
Why It’s Best to Avoid Litigation
Most divorces don’t need to end up in a courtroom. The litigation makes asset division and divorce longer, messier, more stressful, and much more expensive. Whenever possible, spouses should work toward a mutually acceptable agreement through mediation.
In some cases, it’s hard to reach an amicable settlement. Negotiating divorce terms can be stressful when dealing with an unreasonable or vindictive spouse.
For example, the husband is the sole owner of a successful business. Over the years, the wife did a lot of work for the business without any official role or compensation. Now that the couple is divorcing, the husband refuses to allow her any share in the business.
Does the wife have any legal recourse? Yes. While the court cannot allocate the business to a non-owner, it can use the business valuation to calculate marital assets.
Do You Need an Attorney if You Agree on Property Division?
- Make sure you understand your rights under Colorado law
- Explain your legal options in the property division
- Help you negotiate a reasonable divorce settlement
If you are facing a high-asset divorce, contact a divorce attorney as soon as possible. Division of multiple and complex assets is a high-stake process that requires trusted legal advice.
The Drake Law Firm: Experienced Divorce Attorneys in Golden, Colorado
Before you search online for a “lawyer for divorce near me,” consider the skilled legal team at The Drake Law Firm to help you navigate all aspects of the divorce process, including property division.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.