If I Start a Business in My Name and I Divorce My Husband Will He Get Half?
Divorce presents you with a host of difficult realities. One of the harder things you'll face in divorce if you own your own business is the idea that your ex might be entitled to half of what you've built. Exactly what the other side's entitlement is depends upon state law and the facts of your case; while your ex may be entitled to half, he or she may be entitled to nothing, as well.
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Marital Property Division In General
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States divide marital property under the laws of either community property -- a small minority, concentrated in the west -- or equitable distribution -- the overwhelming majority. The major difference is that community property states divide marital property equally, whereas equitable distribution states divide it equitably, or fairly, under the circumstances of each case. The name on any given asset is unimportant; the critical focus of both types of systems is on whether the property is marital or separate. The fact that you may be the only one who ever did a lick of work to build the business is likely unimportant, although, it may be a consideration for the court in an equitable distribution state.
Businesses as Marital Property
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While the specifics of state law on property division vary from jurisdiction, if you started a business during marriage it's going to be at least partly marital property. There may be a separate component because of any value you built in it after the marital estate stopped accruing, which usually happens on the date of separation, date of filing of a separation or divorce complaint. There may also be a separate component to the extent that you invested separate property in the business. On the whole, though, the court will view your business as a marital asset.
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Assigning a Value to Your Business
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What a business is worth is a multi-dimensional question that will require some kind of expert assistance, preferably from a certified public accountant, to answer with any degree of accuracy. While the total of all assets minus all debts is one indicator of value, some businesses mired in debt are still worth a great deal of money as ongoing concerns. A stream of clientele, goodwill in the community and future revenues are also relevant to how much a business is worth. If a dispute arises over what your business is worth, get an expert valuation.
Distributing Your Business
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Just because your business may constitute marital property doesn't mean you have to sell it and give your ex half the proceeds. In most states, the judge can put the total value of the business on your side and compensate your ex for his half either by saddling you with more marital debt or giving him more marital property elsewhere. If the business is your union's only asset, your ex still might be willing to make a deal with you if killing the golden goose would make you a dependent spouse for alimony purposes or significantly affect child support.
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References
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