When getting married, the newlyweds hope for a “happily ever after.” Unfortunately, this isn’t always the case. Division of marital property is always a central issue in the Maine divorce process, and in some divorces, this division must also include any owned businesses or business interests.
If you own a business or have business interests, you may need to get your business valued to create a defensible estimate of value to be divided in the divorce. With the help of Portland ME divorce attorney Susan M. Schultz, of Schultz Family Law, you can receive experience-backed legal counsel and advice regarding the value of your business. We will carefully listen to your case, review any associated materials, and vigorously litigate your case in Maine family courts.
Your Business and the Divorce Process
Your business and business interests are considered to be an “asset” in Maine divorce law. Of course, it’s important to first look at the separate and marital property, and determine if the business, or a part of the business, is classified as separate property or marital property (more on this below).
Through the division of property in divorce proceedings, the Maine family court will seek to divide the property evenly and fairly. When determining the fair division of a business, the courts will consider the business’s assets and debts (its value), as well as the following:
- The value of the business to be set aside to each spouse
- Contributions to the acquisition or the development of the business, using shared marital assets when married, including contributions of time (such as volunteering at the business, or working on a marketing campaign, for instance)
- Each spouse’s economic circumstances
In addition to valuing the business, the courts will also consider how active the non-owner spouse was in the business, whether any other marital assets were used in the operation of the business, and whether the non-owner spouse will continue to play a role in the business after the divorce.
Determining Separate and Marital Property
One fundamental aspect of business divisions in a divorce is the determination of separate vs. marital property.
- Separate property generally involves assets and debts, such as a business, that one spouse acquired before the marriage or through gifts or inheritance. In separate property cases, the other spouse usually had no interest whatsoever in the business.
- Marital property involves any assets or debts accumulated throughout the marriage. For a business, determining marital property is definitely more complicated, as involvement in the business during a marriage could constitute an interest in the company. For instance, if marital funds or credit are involved in the development of the business (such as an expansion, a purchase of another company’s assets, or purchasing additional outlets), then the expanded portion of the business may be viewed as marital property.
Valuing a Business for Divorce
The value of the business is generally determined by using a standard of value to look at the business’s assets and debts, as well as its profitability and valuation date. When determining the assets, evaluators will consider:
- Tangible property, such as inventory, office equipment, and manufacturing machinery
- Intangible property, such as accounts receivable, patents, trademarks, and ”goodwill” (good customer relations)
Additionally, using a standard of value, courts may consider the business’s open market value or they consider the business’s fair value (typically, an income approach that uses historical information and formulas to predict expected cash flow and profit).
By getting a thorough business value that identifies and quantifies all business assets, you can get an objective, quantifiable value of the business interests as well as a road map for settlement or other issues.
How an Experienced Family Law Attorney Can Help
At Schultz Family Law, founding divorce attorney Susan M. Schultz has experience in valuing businesses for divorce and settlement purposes. By getting an attorney with this experience, you have a leading advocate who understands the nuances of Maine divorce law, divisions of property, and how Maine businesses are divided in divorce proceedings. Additionally, this means that you have an informed attorney who can better negotiate or litigate your interests in Maine family courts.