In the intricate realm of divorce proceedings, the division of a business as a marital asset can present a formidable challenge. Many business owners dread the prospect of having to continue business operations with their ex-spouse as a partial owner and want to know if there are other options that will allow them to protect their business throughout the divorce process without undue financial hardship.
Equitable Distribution and Business Division
Oregon adheres to the equitable distribution model, which means that marital property is divided in a manner deemed fair, though not necessarily equal, by the court. The divorce court considers several factors to determine what constitutes an equitable division. These factors include the length of the marriage, contributions of each spouse to the marital estate, and the economic circumstances and earning capacity of each spouse at the time of the division.
Oregon law specifically recognizes time spent as a homemaker as contribution to the acquisition of marital assets – in other words, if one spouse stayed home with the kids while the other spouse worked, the homemaker spouse doesn’t have to worry about that qualifying them for a lesser share of marital assets than if they had worked.
For business owners, the equitable distribution model implies that the business, if considered marital property, will be subject to division. The court evaluates whether the business was established during the marriage or if it was a pre-marital asset that increased in value due to marital efforts.
Valuation and Buyout Options
The valuation of the business is a critical step in the division process. An accurate assessment of the business’s worth is essential for determining a fair division. This often requires the expertise of a financial professional or business appraiser who can evaluate assets, liabilities, and the overall market value of the business.
Once the business is valued, you can explore the various options available to you. As mentioned above, if you’re not interested in selling your business, one common approach is for you to buy out your spouse’s interest, allowing you to maintain sole control of the business. This method requires careful financial planning and may involve ceding other valuable marital assets to balance the division. Alternatively, if you are ending your marriage on relatively amicable terms, you may choose to continue operating the business jointly with your ex-spouse.
Business owners facing divorce should seek legal counsel to explore their options and ensure their interests are protected. Once all of your options are explored, you can make informed decisions that align with your personal and professional goals for your new post-divorce life.
