How to Handle a Spouses’ Business during Divorce
“If my Wife/Husband owns a business, but it is only in his/her name, does that mean they “get” the business if we decide to divorce?”
A business that is developed or actively managed during a marriage is USUALLY considered a marital asset.
However, a lawyer must evaluate and assess the answer to the following questions and more:
- Was there a valid pre-marital agreement that addresses the business interest?
- Was there a valid post-nuptial agreement that addresses the business interest?
- Does the business actually have value?
If the business is determined to be an asset of the marriage, then, certain financial information must be studied to determine the “value” of the asset.
Here is a brief list of information that a lawyer will need to determine the value of a business:
- Five years of Financial statements
- Recent Monthly or Quarterly statements as compared to the same period of the last year
- Board of director minutes for the past five years
- Profit and Loss statements for five years
- Income tax returns
- Personal Income tax returns
- Accounts receivable with aging schedules
- Depreciation schedules
- Shareholder agreements
- Expense reports
- Lease agreements
- Any appraisals
It may be necessary to hire a “valuation expert” to determine the value of the marital portion of the business interest.