Property division in a divorce can involve many complex issues. One type of complication occurs when a business is one of the assets potentially up for division according to Minnesota’s equitable distribution rules.
For business owners, concerns about what will happen to the company can take priority over most other divorce issues. While there is no one-size-fits-all approach, knowing some general principles can help you understand this matter further.
When the business is a marital asset
If you started the business after the marriage, using marital assets, the company will likely fall into the category of a marital asset itself. As such, it will be fully subject to equitable division. On a practical level, this often means either selling the business and dividing the profits or having one spouse buy out the other’s share. In some cases, exes are able to continue operating the company together, but not everyone can manage to get along well enough to work together productively.
Separate property businesses can still be subject to division
In a situation where you started the company before marriage and continued operating it afterward, the situation can be even more complex. For one thing, income from the company may be considered marital property, just as a salary would. Courts also look at the extent to which the spouse contributed financially or through work to increase the company’s income.
Theoretically, it is possible for a company to remain completely separate if you only ever use separate assets to put into it. On the other hand, courts also consider that your spouse contributed to growth if he or she took action to support your efforts. For example, you may have put only separate assets into the company; however, your spouse took on extra work to support the household and enable you to spend more time growing your business.
Getting a valuation
In any case, when a business is in the picture, it is important to get an accurate and comprehensive business valuation. Courts look not just at the income the business brings, but also at the value of its inventory, market factors that affect value, client base and more. If real estate forms part of the business’ assets, there may be additional complications.