When dividing marital assets, there is a great deal of exploration of documents and records that must occur. This is especially true when a business is owned during the course of the marriage. Different business types come with different challenges during division, and different methods of valuation are sometimes used.
If the division of a business is likely to be a part of your divorce, experienced Missouri divorce attorney Joshua Wilson is here to walk you through the process and make sure you are awarded the assets to which you are entitled.
Types of Businesses
While there can be many different forms of businesses, some of the most common are likely during your divorce.
A sole proprietorship is a self-owned, unincorporated business. A sole proprietorship is owned by one person, in his or her own name. If you or your spouse own a business of this kind, the business will be dividable during the divorce.
A partnership exists between two or more people who join together to carry on a trade or business. Every partner shares in the profits and losses of the business. The assets of the partnership to which one spouse is entitled may be divisible during the divorce process.
Corporations are owned by shareholders who own capital stock. Profits are shared among the shareholders. During a divorce, the corporation itself is not divided, but rather any shares owned by a spouse can be divided up, or the value of the shares paid to the other spouse.
Limited Liability Company (LLC)
LLCs are owned by their "members" and are a type of business entity governed by state statute. Members can be individuals, corporations, or even other LLCs. Like a partnership, a spouse who is a member of an LLC can have his or her interest divided during the divorce process.
Valuating the Business
How a business is valuated often depends on the facts of the case, and the type of business involved. Valuation of a business is typically considered to be its Fair Market Value ("FMV"). How the FMV is determined and calculated often varies by local jurisdiction and may be governed by local rules.
Some common methods for determining the FMV include the following.
- Selling the Business: The sale of the business is a major choice but may be the best course in determining its value.
- Buying Out the Other Spouse's Interest: When literally dividing assets of a business is not possible or practical, the spouse who wishes to keep the actual business interest can pay the value of the other spouse's interest to him or her.
- Dissolution of the Business: The business can be dissolved, its assets sold, and any leftovers divided according to each spouse's interests. This is especially common when the business is owned jointly by a married couple and no agreement can be reached about who should keep the business itself.
Consult a Missouri Divorce Attorney
Understanding the process of dividing a business is an important part of the divorce process. With the help of experienced Cass County attorney Joshua Wilson, you will go into the divorce process with power, knowledge, and confidence.
Contact the Joshua Wilson Law Firm today at (816) 331-9968 for a consultation.