Divorcing as a business owner
Many divorces will involve very complicated legal issues. One of the complicated issues can be figuring out how a spouse’s business entity will be valued and divided in a Final Decree of Divorce. There are several business entities, ranging from corporations to sole proprietorships. The first step is to figure out what type of business entity the spouse has. Next, depending on what type of entity it is, that will dictate what is at stake in the divorce, Then, the next step is figuring out if the ownership or property of the entity is community or separate property. This will depend on when the entity or property was established or acquired.
If the entity is a corporation or partnership, an attorney will have to figure out how to value the entity. First, the attorney will look into whether the corporation or partnership has a preexisting entity agreement addressing buy-sell provisions. These buy-sell provisions can include provisions that address valuation of the company. If these provisions do not accurately address valuation, then there could be a need for more formal valuations of the corporation or partnership.
Another type of business entity that may need to be addressed in a divorce is a sole proprietorship. For the sole proprietorship, the attorney will look at the property that is owned by the entity. Depending on the when the property is acquired will determine if it is community or separate property. It is important to determine if it is community or separate property, so that the attorney can figure out if the property will come into play in the division of debts and assets of the divorce.
In conclusion, divorces that involve business entities can be create some complicated issues in a divorce. Other issues that can arise when a business entity is involved can include tax consequences or how the entity will continue after the divorce is finalized. It is important to hire an attorney that can help you navigate through all the complicated issues that can arise during your divorce.
The information contained herein is not to be considered legal advice. You should contact an attorney with Hazel Brown Law Firm, PLLC directly if you have a legal issue.
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