Going through a divorce is never easy, but if you or your spouse own a business, the process becomes more complicated. In Indiana, the court treats the business as part of the marital estate, so it’s subject to division. Whether it’s a small family business or a large enterprise, the way the divorce handles business ownership can significantly impact the financial outcome for both parties.
Business as marital property
In Indiana, the court considers the business part of the marital property if both spouses started or built it during the marriage. This means the court will divide the business just like other assets. However, if one spouse owned the business before the marriage or inherited it, the court may treat it as separate property. If the marriage used marital funds or effort to grow the business, the court could decide the business contains a marital component.
Valuing the business
One of the most complicated aspects of dividing business ownership involves determining the business’s value. Often, both spouses hire experts such as forensic accountants or business valuators to assess the business’s worth. The court will consider factors like earnings, assets, liabilities, and growth potential to determine an accurate market value. The goal is to ensure both spouses get an equitable division of the business.
Options for dividing the business
After determining the business’s value, there are several ways to divide it. One option is to sell the business and split the proceeds. Another option is for one spouse to buy out the other spouse’s share of the business. If both spouses have been involved in the business, they might continue co-owning it, though doing so often leads to tension and conflict.
Impact on future operations
Divorce can impact a business beyond ownership division. If one spouse receives ownership, they may need to buy out the other spouse, which could put a strain on the company’s finances. Additionally, if the business is a family-run operation, conflict between spouses can affect day-to-day operations.
Dividing business ownership in a divorce can be complex. You need legal and financial expertise to ensure a fair division and avoid disrupting the business’s future success.