Navigating the intricacies of divorce is already a complicated situation. It becomes even more challenging if the two of you share a business. After all, it’s providing the income that both of you need.
What are your options when both of you work together at a family business?
Division of marital assets in Tennessee
Regarding the division of marital assets, Tennessee follows the practice of equitable distribution, meaning that marital property may not be divided 50-50. Instead, the court will determine a fair settlement based on the circumstances of both parties, such as the age, health and earning capacity of each spouse.
If one of the spouses started a business before the marriage, it may be considered separate property. However, if both spouses started the business together or contributed to its growth, part or all may be considered marital property. In that situation, there are some choices.
Both spouses may continue to co-own the business after the divorce. This typically works best in a non-contentious divorce, as it requires regular communication.
Another option is for one spouse to buy out the other spouse’s interest, which requires a business valuation. This can be done in a few ways:
- A market valuation is what the company would be worth if sold.
- Asset valuation takes the value of the company’s assets minus any liabilities.
- Income value is the income that the business will generate in the future.
The process can become complicated when a divorce involves a shared business interest. Every situation is unique; however, Tennessee courts want both parties to have financial security. It’s imperative that you work with someone who can protect your interests and help ensure that you receive fair compensation for your contributions to the business’ growth and success.
