Dividing and Valuing a Business in a Madison Divorce
Marital property, which is property acquired by a spouse during a marriage, must be divided during divorce. If one spouse owns a Madison business, their ownership stake in it might be marital property. The complexities involved in the divorce process, especially if huge amounts of assets are involved, are enough to make you hire a divorce attorney to guide you. Your attorney will help you understand whether the business ownership of your spouse is subject to division in your case and how much is at stake. To find a skilled attorney, visit this link.
Kinds of Business Ownership
Valuing a business in divorce depends on various circumstances. To determine whether the business equity of a spouse is marital property, you should address the various kinds of business ownership:
- Business structures. A person can own a business without a formal business structure through sole proprietorship. Formal business structures include limited liability companies and corporations. These legal entities exist separately from those who own them.
- Business assets. In divorce, general partnerships and sole proprietorships can present challenging situations. Those who own these businesses own their assets. Meanwhile, LLCs and corporations hold their own assets. The only assets of the business owners are the shares they own in the corporation or the equity they have in an LLC.
Is a Business Marital or Separate Property?
When exactly the business started is an important factor in valuing it in divorce cases. If a spouse built the business after they got married and used joint account money for it, their business equity is entirely marital property. But if the business already existed before the marriage, part or all of it may be separate property.
Complicated problems can arise during divorce proceedings when both spouses have built the family business together. The challenges come with how it should be divided; instead, of valuing it.
After identifying a business as marital property and the valid involvement of a spouse, the court will value the business. A small business can easily be valued and divided. However, complicated businesses must be valued by experts. Professional appraisers can examine the business’s assets, debts, income, and other financial records to determine its value.
Spouses who own a business together that has a high monetary value may want to hire evaluation experts. If the value of the business has been determined, such experts will declare their findings to the court. If the spouses involved will let the court divide their business, a judge will then make a judgment.