How Is a Business Divided in a Divorce?

Dividing a business during a divorce is one of the most complex parts of property division. The process involves intricate financial valuations and emotional attachments, making it a difficult path to navigate alone. At The VanNoy Firm, our experienced family law attorneys are dedicated to protecting your rights and financial interests, ensuring a fair resolution for your business.

What Happens to a Business in a Divorce?

In Ohio, a business is often considered “marital property.” This category includes assets that a couple acquired or owned together during their marriage. Even if one spouse owned the business before getting married, any increase in its value during the marriage is typically treated as a marital asset. This means both the business itself and its growth are subject to division during the divorce proceedings.

Is Ohio a 50/50 Divorce State?

No, Ohio is not a 50/50 state. Instead, it follows an “equitable distribution” model. This means that marital property, including business assets, is divided fairly, but not necessarily equally. The court aims for a just outcome based on the specific circumstances of the marriage. When it comes to a business, a judge will consider various factors to determine what constitutes a fair division between the spouses.

How Is a Business Valued in a Divorce?

To divide a business equitably, its value must first be determined. This is a critical step that requires a qualified business appraiser. The appraiser will complete a thorough analysis of the business’s finances to establish its fair market value.

This process involves reviewing:

• Business records and financial statements
• Tangible assets like equipment, inventory and property
• Bank accounts and cash flow
• Intangible assets, such as goodwill and customer relationships
• Business liabilities and debts

An accurate valuation helps to ensure that any division of assets is based on a true and fair assessment of the business’s worth.

What Factors Influence How a Business Is Divided?

Several factors influence the court’s decision on how to divide a business. These considerations help ensure the final arrangement is equitable for both parties. Key factors include:

• Pre-marital Ownership: Was the business established before the marriage?
• Spousal Involvement: What was the level of involvement of each spouse in the business’s operations and growth?
• Ownership Structure: What percentage of the business does each spouse legally own?
• Use of Marital Funds: Were family funds invested in the business?
• Buyout Potential: Can one spouse afford to buy out the other’s share?

What Are the Options for Dividing a Business?

When it comes to dividing a business in a divorce, there are several potential paths forward:

• Sell the Business: The simplest option is often to sell the business and divide the profits equitably between both spouses.
• One Spouse Buys Out the Other: One spouse can retain full ownership of the business by compensating the other with different marital assets of equivalent value, like real estate or retirement funds.
• Continued Co-Ownership: If both spouses were actively involved and can maintain a professional working relationship, they may choose to continue co-owning the business. This requires a clear agreement on roles, responsibilities and future decision-making.

Protect Your Business and Your Future

Navigating a divorce that involves a business requires careful legal and financial planning. The decisions made during this time can have a lasting impact on your professional and personal life. At The VanNoy Firm, we have the experience and resources to guide you through every step of the process, from business valuation to final asset division. Get in touch with us today to arrange a consultation and see how we can safeguard your interests.