Dividing a Business Upon Divorce

Any portion of a business that is owned by a spouse for any period of time during a marriage is typically considered marital property under equitable distribution laws.

The portion of the business that a spouse is typically entitled to is as follows:

One half of your husband’s interest that increased during the marriage.

For example:

The day you got married the business was valued at $200,000.00 making your husband’s interest worth $100,000.00 (since he is a 50% partner).

At the separation date the business can be appraised at being worth $500,000.00, making your husbands interest worth $250,000.00.

You would be entitled to 50% of the increased portion ($150,000.00), which would be $75,000.00.

The state that you are divorcing in would apply the appropriate distribution laws. This above example pertains to an “Equitable Distribution” state, which means that the property is dividing in a fair and equitable fashion.

Here is an example of the typical factors considered by an equitable distribution state. Please keep in mind that these factors will vary from state to state.

The court may divide all of the spouse’s property, including any gifts and inheritances, based on the following factors:

(1) the contribution of each spouse to the acquisition, preservation, or appreciation in value of the property, including the contribution of each spouse as homemaker;

(2) the length of the marriage;

(3) the age and health of the spouses;

(4) the occupation of the spouses;

(5) the amount and sources of income of the spouses;

(6) the vocational skills of the spouses;

(7) the employability of the spouses;

(8) the liabilities and needs of each spouse and the opportunity of each for further acquisition of capital assets and income;

(9) the conduct of the parties during the marriage (if the grounds for divorce are fault-based); and

(10) any health insurance coverage.

Fault is not a factor if the grounds for the divorce are irretrievable breakdown of the marriage filed in conjunction with a separation/settlement agreement.

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