Under Utah law, when married couples divorce, they must divide their marital property in a way that meets state guidelines of fairness. For the most part, marital property includes just about every asset and debt the couple acquired while married. While dividing some types of property is relatively straightforward, others present serious challenges. It can be particularly difficult to divide ownership in a business.
Separate and marital property
One complicating factor is that a business could technically be considered either separate or marital property. For instance, if one spouse acquired the business before the marriage, they might argue that it should not be considered marital property.
However, the longer a marriage lasts, the more a couple’s separate assets intermingle. If the business gained value during the marriage, a court may find that the added value is part of marital property. A court would be especially likely to decide this way if the other spouse worked for the business or otherwise contributed to its value.
Buy out, sell, or share
There are three main paths to take when dividing ownership in a business in a divorce:
- One party can buy out the other’s share in the business;
- The parties can sell the business and divide the proceeds; or
- The parties can continue to own the business together.
If you don’t want to sell your business, and you don’t want your ex-spouse as your business partner, buying out their share may be your best option. However, it can be a very expensive one, depending upon the value of the business. If you can’t afford a lump-sum payment to buy out your ex-spouse’s share, you may need to take the value out of the rest of your share of the marital property during negotiations. You may also craft a property settlement note or other agreement to buy out your ex-spouse’s share over time.
This type of property division can be highly complicated, and there are many different factors that could impact how business ownership is divided. It is best to seek help from a family law attorney who has experience in business law and high-asset divorces.