Business Owners and Divorce

Divorce can be complicated. Property must be divided, child custody agreements must be reached, and, sometimes, spousal maintenance (alimony) is considered. When one spouse owns a business, however, a Minnesota divorce can become a more arduous process.

These types of divorces typically involve larger assets that must be divided (both separate and co-owned), and there is generally a greater income disparity between the parties than in divorces where neither spouse owns a business. Additionally, there is an increased likelihood of one spouse being a stay-at-home parent, which may influence who the court views as the primary caregiver. Additional considerations include: the tax consequences of property division, and the fair-market value of the business.

In states with community property laws, each spouse is generally entitled to fifty percent of the business, regardless of who owned and operated it. In contrast, Minnesota is an “equitable distribution” state. This means the court will determine how to divide the marital property according to Minnesota Statute 518.58, subdivision 1:

“…the court shall make a just and equitable division of the marital property of the parties without regard to marital misconduct, after making findings regarding the division of the property. The court shall base its findings on all relevant factors including the length of the marriage, any prior marriage of a party, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each party. The court shall also consider the contribution of each in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property, as well as the contribution of a spouse as a homemaker. It shall be conclusively presumed that each spouse made a substantial contribution to the acquisition of income and property while they were living together as husband and wife. The court may also award to either spouse the household goods and furniture of the parties, whether or not acquired during the marriage. The court shall value marital assets for purposes of division between the parties as of the day of the initially scheduled prehearing settlement conference, unless a different date is agreed upon by the parties, or unless the court makes specific findings that another date of valuation is fair and equitable. If there is a substantial change in value of an asset between the date of valuation and the final distribution, the court may adjust the valuation of that asset as necessary to effect an equitable distribution.”

Divorces involving professional business owners (doctors with their own practices, for example) can carry long-term financial consequences. Due to the high stakes involved, it is imperative for each spouse to obtain the counsel of a qualified Minnesota divorce attorney.

To ensure your business assets are protected, please contact Minnesota family law attorney Chris Banas at 651-361-8109.

The source of referenced Minnesota Statutes is the Office of the Revisor of Statutes, State of Minnesota, Copyright 2008. All rights reserved.

Categories: Divorce