Dividing property in divorce is never easy, but dividing some types of property make the process more complicated than others. Dividing a business can be particularly challenging.
Is your business part of your marital property?
If you or your spouse owns a business, it will most likely be considered as part of your marital estate when you divorce. Under Indiana’s divorce laws, all assets and debts acquired by the spouses before or during the marriage are subject to property division in divorce.
That said, when Indiana courts decide on property division matters, they do not necessarily divide everything 50/50. Either party can argue that they deserve a larger share. The court can weigh their arguments and consider such factors as when a party acquired an asset. So, if you owned a business for years before you were married, the court may determine that you deserve a larger share of its value.
What is the value?
This is where dividing a business in divorce can get very tricky.
Generally speaking, a business owner has three choices in divorce:
- Continue running the business with their ex as a co-owner.
- Sell the business and divide the proceeds.
- Buy out their spouse.
For many reasons, the third option tends to be the most popular, but it also raises many technical hurdles.
First and foremost among these hurdles is that the parties must determine the value of the business. This may require hiring professionals who will put a price on the business. Once they agree on the dollar value of the business, the spouses may then negotiate a buy-out price for the spouse who does not want to continue as owner.
This raises another technical difficulty. Depending on the dollar value of the business, the buy-out price can require getting ahold of a large amount of money — not an easy feat for a small business owner who is going through a divorce.
To pull this off, you may need to secure financing and work out a plan to pay off your spouse over an extended period. This can be complex, and requires help from experienced professionals.
