If your family owns and runs a business together, you may be concerned over what will happen to that business during your divorce. It is true that the business itself or some portion of the business likely belongs to the marital estate. That means that the business is subject to equitable distribution under our state’s laws. Generally speaking, that will mean dividing the business in half—but not necessarily. Under equitable distribution rules, the court divides assets and liabilities according to what is fair, not necessarily what is equal. In this article, the Indiana divorce lawyer, Chris Arrington, will discuss how businesses are divided during an Indiana divorce. 

Assessing the business’s value

The first step in dividing a business is to determine its value. Generally speaking, this is accomplished through the aid of a forensic accountant. The forensic accountant’s job is to evaluate the business and then come up with a figure that represents the business’s value. This is absolutely crucial to the process of equitable distribution. Couples often hire professional appraisers to pore over their company’s paperwork and evaluate the business. 

Equitable distribution of the business

If you and your spouse started the business together, then the process is significantly less complex than if an individual brought a business into the marriage. 

Indiana is considered an equitable distribution state. That means that the court will divide assets according to what is fair rather than down the middle, like in some other states. Instead, the court will attempt to divide the estate (and the business) fairly based on various factors. These include each spouse’s contributions to the business, each spouse’s financial circumstances, and the length of the marriage. 

Buyout or co-ownership

Once the business has been properly evaluated, the couple must decide what to do with it. One party may choose to buy out the other’s stake in the business. Alternatively, the spouses can opt to sell the business or co-own it together. Much depends on what you individually want moving forward. If you want to be done with the business, you can either sell it and split the proceeds or allow your spouse to buy out your stake in the business. If you want to continue running the business, you can do that too. 

Mediation and negotiation

Issues related to the marital estate are generally handled in mediation. Mediation is a negotiation process that you and your spouse will undergo to dissolve your marriage. During mediation, you can handle matters like the equitable distribution of the marital estate, alimony, and more. With the guidance of a third-party mediator, the spouses can work toward a mutually acceptable solution. If the spouses cannot agree, however, then the court will have to decide the just way to divide the business. 

Talk to a Danville, IN, Divorce Lawyer Today

Do you have any questions regarding equitable distribution or your family business? If so, do not hesitate to call Chris Arrington today and learn more about how your business would be handled in a typical divorce case.