Certain things that can greatly complicate divorce, and one of those is a shared business. With a shared business among your assets, dividing those assets can get quite difficult. Talk with an Indianapolis, IN divorce lawyer for women to make sure your rights are protected in these situations.
How Are Family Business Assets Divided in an Indianapolis, IN Divorce? An Explanation From a Divorce Lawyer for Women
How Assets Are Divided Generally Under Indiana Law
Indiana law requires judges to divide up property in a divorce in an “equitable” manner. This is in contrast to some states where property is divided 50-50. Equitable does not mean equal, and in many states who also follow an “equitable” division model, the law directs the court to make a division of assets based on what’s fair and just.
Indiana’s law is slightly different in that, though it is an equitable division state, the law also requires the courts to begin the process with the assumption that an equal division is what is fair and just. Thus, if you believe that you should be getting more of the assets than your spouse, you will need to show proof of why a 50-50 split is not equitable.
Property That Gets Divided
In many states, there’s a difference between separate property and marital or community property. Marital property is usually whatever either spouse acquired during the course of the marriage, while separate property is whatever was owned by one of them alone prior to the marriage or which they inherited, unless that separate property has been mingled with community property. In these states, marital property is divided and separate property remains the sole property of its original owner.
Here in Indiana, all property that was acquired by both spouses as the result of a joint effort, even if that happened before the marriage; all property that either spouse owned before the marriage; and all property that either spouse acquired during the marriage is all marital property and all divisible in a settlement. This rule applies up until the date of the couple’s final separation, which is not when they stopped living together but the date they legally filed for divorce or legal separation.
This difference in the rules has some implications when dividing a business. For one, a business that one partner owned prior to the marriage is now fair game for division. In addition, if the couple worked together to build a business prior to getting married, that business can be divided in a divorce. The good news here is that Indiana courts don’t force a divorcing couple to try to figure out whether separate property has been mingled in someway with marital property. This can be a big issue in divorce in other states. For example, if an inheritance is put into a shared business, this often means that the inheritance then becomes “marital property” and things get complicated and contentious. Indiana law actually simplifies this issue.
The Best Route: Divide It Yourself
It’s always possible for you and your spouse to make the decision yourselves about how to divide your business. Not only does this allow you to retain control, but it’s also preferred by the courts whenever possible. You will have a chance to do this before the divorce trial and other chances during the process. The only caveat here is that any agreement you come to has to be approved by a judge, and that means you need to be able to make a case for why it is fair. A divorce lawyer for women can help you ensure that any agreement you come to with your ex is fair to you and will be acceptable to the court.
Another thing to bear in mind is tht, if you and your spouse can agree on all areas of the divorce (not just asset division and what to do about your business), you then have the option to file for an uncontested divorce. An uncontested divorce will be fast, cheap, and simple in comparison to a contested divorce.
What’s the Business Worth?
Before you split your business, you must properly evaluate it. You will need a professional appraiser who is experienced in giving accurate evaluations of all the tangible and intangible assets and liabilities of a business. An experienced lawyer will have a network of these evaluators to call on, and some of what they are going to look at in the business will include the real estate and any buildings; inventory, machinery, and office equipment; bank accounts and accounts receivable; leases and mortgages; and any trademarks, patents, and copyrights.
Beyond this, you also need to do an evaluation of the business brand. In other words, what is its reputation actually worth? This has to also be evaluated considering the reputation of both spouses personally. This is important because, in some cases, if one spouse withdrawals, the business may suffer a loss to the perceived value of its brand because of the reputation and goodwill that spouse brought to the table.
Once all of these aspects have been considered, your lawyer and the valuation experts will help you to figure out a fair market value for the business. There is going to be room for negotiation here because determining the fair market value of any business always has an aspect of subjectivity to it. There are generally three ways of going about determining this value. You could consider the value based on what comparable businesses have sold for in the area recently. You might also look at past and current revenue and then make a projection as to what to expect for future revenue. Finally, you can determine value by calculating all the assets and subtracting all the liabilities.
Choosing How to Divide
Once you have come to a valuation of the business that you can agree upon (or evaluation that the court has decided is accurate if the two of you cannot come to an agreement), the next step is to decide how the property is divided. Again, you and your spouse can do this on your own if you’re able to come to an agreement. One way of doing it is to sell the business and divide the proceeds. This is often a good choice if it would not be possible for one spouse to run the business on their own.
Another option is for one spouse to buy out the other spouse’s part of the business. This can be done through a cash payment or by negotiating for one spouse to receive more of other marital assets in exchange. Sometimes you can work out a payment plan. A third option is for the two of you to continue as business partners even though you are no longer married. Some people are able to do this, and in fact, some couples find that they get along better as business partners once they no longer have to live together as life partners.
If you cannot come to an agreement, the court will divide the business according to the guidelines of Indiana law in consideration with all other marital property and its value. Whatever situation you find yourself in, a divorce lawyer can help things go more smoothly and protect your rights. Contact us today at Woodford Sathappan McGee in Indianapolis, IN for help today.
