When a person or couple works long and hard to develop, launch and sustain a successful business, it’s understandable that asset protection would be of paramount importance if divorce occurs. Whether spouses also happen to be business partners or one spouse runs the business while the other remains uninvolved, when they file for divorce, both spouses will likely be concerned with business assets when it comes time to divide marital property. Washington is one of nine states in the nation that use community property laws to process divorce.
This means all marital property is typically split 50/50 when spouses divorce. When a business is involved, it becomes necessary to seek a business valuation before the court can determine half its value. The three main components of a thorough business valuation include existing assets, income (current and projected) and market values at the time of the assessment.
Another determining factor in how business assets are divided in divorce is whether a prenuptial agreement exists that separates a particular business in ownership. If so, the court would carefully review the terms of the agreement before handing down a property division ruling. Such issues are often complex and may lead to spousal dispute if one of the spouse believes the scales are being unevenly tipped.
Some Washington residents run into major problems when their soon-to-be-former spouses try to hide business assets to keep them from being subjected to marital property division. This type of behavior is illegal. Full disclosure is expected from both sides when listing business assets and presenting financial records or other documented information regarding an existing business. An experienced family law attorney can help rectify any business asset problems that arise in divorce.
Source: welathmanagement.com, “Three Pressing Issues For Business Owners Going Through a Divorce“, Mark S. Gottlieb, Jan. 30, 2018
