How divorce could impact your business

On Behalf of | May 10, 2021 | Family Law |

Divorces in Idaho are usually watershed moments in the life of all involved parties, and many times that includes business partners who are not even involved in the family issues leading to the separation. Individuals who own businesses face a specific property distribution issue that typical divorcing spouses do not face.

The business is central to any division of marital property, including when one of the spouses is part owner in any particular business entity. These are complicated divorces, especially when the couple has been married for many years and the business has grown over the duration of the marriage. There are three family law eventualities in a business divorce settlement.

1. Closing the business

Many divorces happen due to financial problems along with other irreparable issues. The size and value of the business are important factors, and many times the business cannot continue as a single-owner operation. Both spouses will typically share in asset distribution and liability responsibilities even though these issues can be components of the divorce mediation agreement when negotiated by each family law attorney.

2. Buying out a spouse

The simplest method of settling a business ownership issue in a divorce is one spouse paying the other for his or her share of the operation. This is usually a 50-50 split when a couple owns a business together. All of the income generated by the business during the term of a marriage is marital property, and even those businesses that one partner began before the marriage became effective can still result in partial ownership payoff based on income and accrued business value throughout the marriage until the time of a final decree.

3. Spousal percentage in a partnership

Some divorcing couples are not both partners in a business, but the increased value of a business and the income earned by one partner is still considered marital property in Idaho. Sometimes this settlement is included in a prenuptial agreement or in an agreement between the non-married partners, but typically any accrued assets are divided in equity on some level.

It is never a good decision to attempt handling a divorce personally when a business is involved. Always retain an experienced Idaho family law attorney for solid representation and a fair settlement.