What Happens to My Business During a Divorce in Minnesota?
May 9, 2013 | Elizabeth A. SchadingIf you opened or created a business during a marriage in the state of Minnesota, the business is marital property. That means that it counts as one of the assets that will be factored into the divorce settlement.
If you continued to work at a business created prior to the marriage, the business will have aspects of non-marital and marital value, which may be tricky to determine.
Minnesota law demands that marital property be divided equitably (though not necessarily equally). This does not mean you will necessarily lose your business, however. It simply means that the business is an asset which must be taken into account.
Business valuation is a complicated process. It’s complicated even when you simply want to sell the business. It can get even more complicated during a divorce.
You have to understand this because your business value may be larger or smaller than you think it is. Business valuation takes many factors into account, including the company inventory, the company assets, the income received by the business, and even intangible factors like “customer goodwill.”
Two business valuation agents may not even entirely agree on what a business should sell for, even if they look at the same set of books and the same set of factors, all things being equal. This can make things difficult in divorce court when it becomes time to make decisions about how all of the marital assets should be divided.
When it comes to allocating a business the courts have options. It could force the sale of the business to distribute the cash amount. Another option is to award the entire asset to one spouse or the other. When this happens, the spouse who receives the business generally must make cash payments to the other spouse over time, if it is impossible to pay the entire amount at the time of the divorce, or equalize with other assets.
If you are concerned about the fate of your business remember that asset division is a total package. You may be able to sacrifice some other part of your marital property in order to keep the business.
It is uncommon for a business to be sold if it would deprive the business-owning spouse of future income. With the right professionals on your side, including a family lawyer and a business lawyer, you should be able to create a situation that you can live with.
If you own a business and you’re facing a divorce then contact the experienced divorce attorneys at Barna, Guzy, and Steffen. We’ve been helping our clients in the Minneapolis metro area get the best possible outcome for their complicated cases for over 75 years and we can help you, too.