Dividing Business Assets in Divorce

In Minnesota, assets and property acquired during the marriage are generally considered marital property and subject to equitable division upon divorce. Some assets are fairly straightforward and simple to divide, such as a shared bank account. Others, such as a business or professional practice, require more thorough investigative and valuation efforts. 

Every divorce is different, but the following concerns often accompany the division of business assets in divorce:

  • What is the business worth? Generally, the fair market value of a business is the price at which a willing buyer would pay a willing seller for it. Factors that can influence a business’s value include its earning capacity, economic outlook, dividend-paying capacity, the market price of stocks, and “goodwill” or reputation in the community. A knowledgeable divorce attorney can protect your interests in the valuation of a business and may call upon experts in accounting, business valuation, appraisal, and other fields to obtain a fair and accurate assessment.
  • What is the separate or nonmarital property and what is marital property? If the business was established during the course of the marriage, the assets are generally considered marital property and subject to property division. If the business was established prior to the marriage, the situation becomes more complex. A business formed before the marriage is separate or nonmarital property, but any increase in value the business gained during the marriage may be considered marital property. An accurate assessment of the marital property value can only be gained after a thorough evaluation of the business’s history, each spouse’s contributions to the business, the nature and cause of the increased value, and other factors.
  • Who keeps the business? If only one spouse runs the business, he or she will likely stay in that role after divorce in most cases, based on our experience. The spouse retaining business ownership will generally have to “buy out” the other spouse with other marital property. The ownership in the business may also influence spousal maintenance. It is uncommon for divorced spouses to remain business partners. However, if they wish to do so, it may be appropriate to divide the business assets equally.

Whether you run the business or your spouse does, you want to make sure that your financial interests are protected in divorce. It is always advisable to consult with an attorney who is experienced in high-asset property division matters before signing anything or making any important decisions.