What Will Happen to the Business in Your Divorce?

Technically, the business you own is just another asset to be divided during divorce proceedings. A simple, closely held business is a much more complicated asset than a house or vehicle. A company has countless moving parts, including staff, tax obligations and licensing requirements. Not paying close attention to a business can result in its failure. So, while a business is an asset, figuring out how to divide it in a divorce can be extremely complicated.

Equitable Distribution

Georgia is an equitable distribution state. This means that marital property—property that either spouse received during the marriage—should be split in a “fair and equitable” way. Of course, the spouses are free to come up with their own property division arrangement without the need for a judge’s decision. In contested divorce cases, though, this often is not possible.

The first thing that needs to be done is to determine the separate and marital portions of the closely held business. If one spouse started a company prior to the marriage, maintained it, and received no contributions whatsoever from the other spouse, that company will be classified as separate property. That is rarely the case, though, which means that spouses must bring in one or more financial experts to parse through documents and, eventually, determine the value of the separate and marital portions of the business. Even if you or your spouse started the business prior to getting married, a significant portion of the business could become marital property if either spouse made contributions toward its success.

What Are Your Options?

Some couples are able to continue co-running the family business after a divorce. This is certainly the exception and not the rule, however. Most divorcing couples choose one of the following options for dividing the marital portion of the business:

  • Selling the company and splitting the proceeds. If both spouses are ready to move on from the business or physically move away from the area, finding a buyer and selling may be the best option. 
  • Buying out or selling your ownership interests. Your spouse might be willing to buy out your portion of the business, or you could look for an outside buyer. 
  • Transferring ownership to or from your spouse in exchange for other marital assets. A fair and equitable division of marital property could involve your taking over the entire company in exchange for the main residence (or some other arrangement). 

Don’t forget about any prenuptial or postnuptial agreements. These contracts lay out the consequences of a divorce on any number of things, including assets.

Choose a Law Firm That Cares

The Anderson Firm can provide you with professional and discreet legal services if you have recently filed for divorce or are planning to file soon. Our attorneys know how stressful the process can be and promise that we will guide you through everything as efficiently as possible. Your goals are the goals of The Anderson Firm. You may easily set up an appointment for an initial consultation through our website.

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The Anderson Firm, LLC

Precious Anderson knows her clients want quick, painless solutions for their small to mid-sized business problems.

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