Navigating Divorce For Minnesota Business Owners
Going through a divorce can be especially challenging for couples who own businesses. Whether you run the business together or it’s only under one spouse’s name, a divorce can impact your business in various ways. It’s important to consider all the factors as you pursue a divorce so you can make an informed decision regarding your marriage and your business.
How Divorce Can Impact Your Edina Business
At Hill Crabb, LLC, our experienced divorce lawyers have worked closely with owners of all types of businesses throughout Edina and the Twin Cities. We understand that you have likely spent years building your business and don’t want your divorce to ruin what you’ve achieved. You’re likely worried about how you will have to divide the business during property division and if that means ending your business entirely. Our attorneys are here to guide you through the steps toward protecting your business and achieving an outcome that is satisfactory to all parties.
When it comes to businesses and divorce, there are generally a few different scenarios:
- You and your spouse each own 50% of your business.
- You own the business, but your spouse is involved in certain company tasks.
- You own the business, and your spouse stays at home.
- You inherited the business.
In these scenarios, how the business will be handled during divorce may differ. When both spouses are involved in or contribute to the business, the business is considered marital property – even if the business is solely under your name. If you have ownership of your business but your spouse occasionally works part-time to help with accounting or other tasks, your spouse has a claim to the value of the business.
While inheritances are generally considered separate property, if your spouse has been involved in the business, they can still claim a part of it during divorce.
If the business is entirely in your name and you have kept it separate from your spouse, it may not be considered marital property, especially if you formed the business prior to your marriage. Prenuptial and postnuptial agreements can help spouses arrange this type of separation between business and marriage.
The Importance Of Business Valuation
When dividing a business between spouses, you must first determine the value of the business. There are generally three ways this can be done:
- Income approach: This is based on how much the business makes each year and estimates how much the business will make over the course of a certain number of years into the future.
- Market approach: This approach considers the value of similar businesses in the industry that have been sold within the past one to three years.
- Asset approach: This method is determined by calculating the value of the total business assets and subtracting the total liabilities from that value.
Any of these methods can help determine the overall value of your business. An attorney may hire expert business appraisers to review your business and make the necessary valuation. Once you have the cost of your business, you can focus on deciding how to divide it, whether through selling the business and splitting the value evenly, buying out your spouse’s share, or other options. Our attorneys can help you find the right solution.
Learn How To Protect Your Business Today
If you’re a business owner going through a divorce, you need a skilled lawyer on your side who knows how to tackle this complex situation. We can help you take the necessary steps to protect all the hard work and effort you have put into your business.
Call us today at 612-568-5967 to schedule a free consultation or email us online.