When a family-owned business is central in a divorce proceeding
In some Georgia divorces, an added element of concern features that is not the case in the majority of divorces. That is especially true in a high-asset divorce — but also true in other divorces as well — involving a family-owned business.
A number of questions can arise pursuant to divorce negotiation as to what will become of a family business. They include these:
- Typically, will it be sold?
- How will property valuation be determined?
- What part of a business is separate property? Marital property?
Sound advice for any divorcing person with a family business in play is to consult with an experienced family law attorney commanding proven results in high-asset divorce matters, especially those where family-operated businesses are concerned.
A rule of thumb that is often stated is that a person who began a business prior to marriage will generally retain that enterprise following a divorce. If the other spouse is entitled to any of the increase in value in the business that accrued during the marriage, he or she will receive it through the assignment of a different asset that is equal in value.
There are many questions and considerations that a high-asset divorce attorney will help a client focus upon concerning a business. Did a spouse who married the business originator contribute materially to the business during the marriage? Was a premarital agreement executed prior to marriage that explicitly discussed and set forth understandings regarding the business in the event of a divorce? If not, did the parties execute a postnuptial contract regarding that subject?
Again, how a family-owned business will ultimately be valuated and divided will depend on many factors and is a singular matter in every case. Consultation with experienced legal counsel is a good first step toward understanding the process and protecting legal interests.
Source: News & Observer, “Ask the experts: Prepare for marriage, divorce so they don’t tear business apart,” Jessaca Giglio, April 2, 2013