Your business is not just another asset to be divided in your divorce settlement. It represents your livelihood and your future. You want to make sure you protect your interest throughout the process. So, what steps should you take when it comes to dividing your business or professional practice during your divorce?
Indiana laws regarding property division
Your first step is to understand how property division laws work. Indiana law follows the “equitable division” of marital property rule. Despite the name, this does not mean the court will split each piece of property 50/50. Rather, the court pools the marital assets and considers many factors to determine what share of assets each spouse will receive to create a balanced and fair outcome.
If you and your ex can create a solution that satisfies both of you, the court will likely agree to it, but it must reflect an equitable outcome. Involving financial planning professionals to help you analyze complicated assets is highly recommended. An experienced attorney should help you draft your settlement agreement.
What are the next steps for your business?
You and your ex will need to take several steps to determine how to proceed with the business, including:
- Determine each spouse’s level of interest in the business – If you run the business together, you may need to have a serious discussion about the future of the business and whether you can continue to work together. If only one of you is involved in the business or plans to be in the future, the other spouse can be bought out through the property division process.
- If neither of you wants to continue the business – For various reasons, you may decide not to continue the business at all. In that case, you can determine together if the business is worth selling or would be better off closing down operations.
- Complete a business valuation – In order to divide the business interest, you must know how much it is worth. Professional business valuators will review every aspect of your business to determine its value. Indiana follows the “fair market value model,” which considers what the business might be worth if you were to try to sell it on the open market.
- Determine a fair outcome – If you and your ex agree on how to proceed, consult with professionals to make sure your plan is fair and reasonable. For example, if you want to keep the business and your spouse wants to keep the house, that may seem like a fair trade, but only if the values are similar. You may need to supplement this trade-off with other assets.
If you cannot come to an agreement, you will need to present your case in court. Your attorney will argue your position and the judge will determine the future of your business.