You were once a power couple, building your net worth and striving towards bigger and better goals together. Now, in the painful aftermath of a union that no longer works, you are wondering what will happen to all you have built. In a high asset divorce, business ownership is a common obstacle. Overcoming it equitably is a challenge.
Community Property Issues
If you both own a business together, it can be identified as an asset characterized as marital property. But, because Washington is a community property state, business ownership may come as a surprise when there is only one named owner. In many cases, the law recognizes both spouses as business owners, even when only one of you is named as owner and involved in its operation.
Business Valuation
In order to “divide” a business fairly, it must first be accurately valuated. A business appraisal is the best way to accomplish this. Experts will appraise and evaluate your business, its assets, and debts. Other pertinent matters that should be reviewed are tax consequences, and accounting and finances. Your attorney can help you retain the professionals required for this.
Small Businesses
If you own a small to medium-sized business, you and your spouse may be able to carry on as co-owners. Naturally, this depends on many factors. How well are you able to get along? How much oversight is required to run the company? A low-maintenance operation is likely the most suitable for this arrangement. But typically, continued co-ownership is not in the cards for most divorced couples.
Retain and Buy Out
The more common scenario is to keep the business operating, but buy out your spouse over time. This allows you both to profit from your time and investment in the company. It’s the more realistic option when one of you doesn’t want to see the business end with the marriage.
Dissolve and Sell
In some cases, the business just won’t work with only one of you involved, but you are unable to continue running it together. If the animosity is too high, buying your estranged partner out may not work either. The anger, distrust, and emotional ties often get in the way of negotiations. This can tie up a property settlement for years, and a business cannot continue to function in this state of flux. For these and other reasons, the only option left may be to dissolve the business, sell the assets and split the profits.
Regardless of the option you choose, it’s important that you both be on the same page. Discuss the situation with your Washington divorce lawyer. Open communication is a great asset in these potential volatile situations, where high net worth and high assets are involved.
Sources: http://family.findlaw.com/marriage/what-s-mine-is-mine-what-s-yours-is-mine-who-owns-what-in.html, http://www.natlawreview.com/article/valuation-or-calculation-divorce-case