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Guiding business owners carefully through property division issues including business interests

When one or both spouses own a business, the divorce process is more complex. The business may be subject to division in the divorce, even if only one of the spouses was actively engaged in the business. Additionally, the value of the business can have a significant impact on how other property is divided. The experienced Murfreesboro divorce lawyers at Dotson & Taylor Attorneys at Law are experienced at helping spouses with complex property division issues. We can discuss the specific circumstances involving your business and advise you about what your rights are.

Equitable distribution

Tennessee is an equitable distribution state, meaning that the way the courts determine how to divide property is to consider what is fair, or equitable, under the circumstances. The courts are not required to provide an equal division of the couple’s property. Therefore, it may be possible that one spouse may be given a much higher percentage of the business ownership in divorce. This may be the spouse who was primarily responsible for establishing the business and running it on a daily basis. However, the court may also consider the contributions that the other spouse made, such as earning a living that went partially to funding the business, helping to support the business by working in the office free of charge or focusing on other responsibilities so that the other spouse can tend to the business more.

Business evaluation

Another important component to going through a divorce when owning a business is determining an accurate value of the business. Very often, the business will not be liquidated in the divorce process because one or both spouses may continue to rely on the income it generates. However, the spouses need to determine the business’ value to estimate their portion of the marital estate. The spouse hoping to retain ownership and control of the business may decide to buy out the other spouse. This may be accomplished by giving cash to the other spouse, getting a loan to buy out the interest or exchanging other marital property for the spouse’s interest. Therefore, the spouses must be able to arrive at an estimate of the business’ value.

Often a business appraiser or other expert may be tasked with determining the value of the business. Sometimes different business valuation experts may arrive at very different evaluations of the business. They may use different approaches to determine the value of the business, such as the asset-based approach, the market approach or the income approach. They may also use their professional judgment to arrive at a value of the business.

Some factors that may be considered when evaluating your business include:

  • The type of business
  • The history of the business
  • The value of assets in the business
  • The average earning capacity
  • The outlook for the industry as a whole
  • The value of any stock issued by the business
  • The risks of the business
  • Any debt on the business
  • Goodwill of the business

If you have a business interest at risk, contact our skilled Murfreesboro divorce attorneys for guidance your can trust

At Dotson & Taylor Attorneys at Law, we have worked on numerous cases involving the valuation of businesses. We have a strong understanding of valuation methods, accounting and finance. We take steps to maximize your interests and protect your business during the divorce process. We combine our superior knowledge with an unsurpassed commitment to your well-being. We offer flexible appointments and a free initial consultation. Schedule a free review of your case online or by calling us at (615) 890-1982.