Business owners and individuals running professional practices may face a much more complex divorce process due to their unique resources. If they started the company during the marriage or invested marital income in the business, at least some of its value may be subject to division.
Business owners are at risk of losing control of the organizations they operate. They may have to share accumulated equity with a spouse. In some cases, business owners may face an unfair divorce outcome where they end up financially penalized for their prior success.
A thorough review of all financial documentation during divorce is crucial for the protection of a business owner.
The same resources shouldn’t count more than once
One of the most common issues that affects property division and financial support orders for business owners involves counting the same income or assets repeatedly. For example, there are many different business valuation models, some of which use future revenue as part of the equation.
The financial outcome of the divorce could be quite unfair in cases where a spouse uses future revenue to determine the company’s fair market value for property division purposes and then faces a claim against that same income for the purposes of alimony.
Business owners may need help properly valuing their holdings. Accounting for depreciation and liabilities can prevent scenarios in which a business ends up overvalued.
Selecting an appropriate valuation model can help prevent a double dip that puts a business owner at a disadvantage during a divorce. Business owners facing divorce may want to partner with attorneys familiar with complex divorce cases involving high-value asset distribution and alimony requests.