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Courts usually aim to keep the business intact and profitable. If the business generates at least enough income to cover its maintenance, the court will be reluctant to force its sale.
If the business is not profitable or if the business owes money, however, the court will generally aim to figure out how to keep the business intact, either by selling off assets, or by using those assets to borrow money.
If that is not possible, as a last resort, the court will then consider forcing the sale of the business and dividing the money between the spouses.
Assessing Asset Value
It is often difficult to assign a business a value based on its profits, especially in a divorce, during which accounts may not be kept up to date, and the business’ production and profitability may have been affected by the breakup.
Detailed valuations by outside consultants can be expensive and are often disputed by one of the spouses.
It is better for the spouses to come to an agreement on the business’ value between themselves for a fair settlement.
Division
The court will generally not closely follow company or strict partnership law unless a partner besides the spouses is involved.
If one of the spouses was included in the business only for tax purposes, or contributed significantly less to the business in terms of capital or labor, that spouse is likely to receive a lot less than the spouse who has contributed substantially to the business.
If the business was a true joint enterprise in which both parties contributed equally, the court will likely be inclined to divide the business, or the money gained from its sale equally.
Please contact us today for a free consultation with an experienced divorce attorney who can inform you of your options, and legal rights, and help you plan the best course of action.
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