Dividing a business during a divorce can be one of the most complex and contentious issues that a couple endures. Whether a business is owned by one or both spouses, dividing it involves several considerations for equitable distribution.
Determining community property
Any property acquired during marriage is community property and subject to equal division. This includes businesses started or acquired during the marriage, but the court may consider the business as separate property if one of the spouses established it before the marriage.
Business valuation
The first step in dividing a business is to determine its value. A professional business appraiser can do this by assessing elements of the company including:
- Assets
- Liabilities
- Income
- Market position
The valuation process can give an idea about all areas regarding a business’s worth, which is necessary for equitable division.
Methods of division
Spouses can divide a business several ways during a divorce. This division is divided into three categories: buyout, co-ownership, and sale of the business.
One spouse may buy out the other’s interest in the business, but in some cases, ex-spouses may continue to co-own the business post-divorce. However, the sale of a business will result in dividing the proceeds equally.
Legal agreements and considerations
Legal agreements must detail the division method, especially in co-ownership scenarios. These agreements should cover management responsibilities, decision-making processes, and dispute-resolution procedures.
Dividing a business in Louisiana involves careful consideration of various factors. By understanding these elements and seeking professional guidance, spouses can ensure a fair resolution.