When one or both spouses own and operate a family business during the marriage, there is often a dispute as to what will happen to the business in a divorce. Attorneys at Perusse Nixon, PLLC, represent clients in divorce matters, and we understand that property division can be very contentious, especially when a family business is involved. Keep reading to learn more about how family businesses are handled in Colorado divorces.
How Property Division Works in Colorado
Property division in Colorado is generally based on an equitable distribution, which means that rather than dividing property equally, it is divided in accordance with what is fair to both parties. The business will have to be valued. That is done by employing a CPA with experience in doing business valuations. Determining the value of a particular business is done through various methods. It might be through looking at the income or assets of the company or what it could be worth if it was sold. There are many considerations, however, that go into which method is the best for the particular industry sector.
The business may continue, and the spouse who is not an officer can be paid his or her interest based upon the valuation. If there is a partnership or member agreement, sometimes that will shed light on what happens to the business in the event of a divorce.
If two people own and operate the business equally, then perhaps the only way to resolve the dispute is to dissolve the business and move on separately. There are many options when dealing with a family business.
Courts do not always have to make property division decisions, however. In some cases, divorcing spouses will work out property division matters with the help of attorneys through mediation or other types of alternative dispute resolutions.
Is There a Marital Agreement in Place?
Couples sometimes address family business matters in a prenuptial or postnuptial agreement so that there are no uncertainties about what happens to the business upon a divorce. These terms will generally be enforceable so long as the contract complies with Colorado’s marital agreement laws.
Important Family Business Considerations
When deciding what to do with a family business, it is essential to look at the total picture to ensure that you secure an equitable distribution. It’s critical to work with a family law attorney who is connected to the best CPA’s to do the work on your case.
Things like retained earnings, necessary and reasonable business expenses, and control over the company are some of the things that impact the value of a business. Is the business tied to one person’s reputation? Are there many offices across a region? Are there a lot of assets in the business? A complete financial analysis will need to be done in order to get an accurate picture of how the business is run.
Colorado Divorce and Property Division Attorney
If you are going through a divorce in Colorado and have questions about family business or other property division matters, Cindy Perusse of Perusse Nixon, PLLC, can help. Contact our office at 303-228-2285 or online to schedule a low-cost consultation. Family business matters in divorce are complicated, and you need an attorney who will advocate for your best interests.