A business can survive a bad quarter. It can survive a lost client, a market downturn or a difficult year. But divorce can create a different kind of threat: the possibility that the company becomes part of a financial breakup.
For a business owner, the concern goes beyond, “Who gets what?” The real issue may be whether years of work, growth and investment can remain intact after the marriage ends.
Ohio law requires courts to divide marital property equitably, but the division does not have to be equal. Business owners can take these three steps to approach that division with the bigger picture in mind.
1. Draw the line between the business and the marriage
The first question is not necessarily, “How much is the business worth?” It is, “How much of the business belongs in the marital estate?”
Ohio classifies property acquired during the marriage as marital property. A business interest owned before marriage may qualify as separate property, but appreciation tied to either spouse’s labor, money or other contributions during the marriage may become marital property. Owners should gather formation documents, financial statements, tax records and other records that show how the business developed over time.
2. Establish the business’s true value
A business valuation can significantly affect how the marital estate is divided. An accurate valuation can help determine how much of the business belongs in the marital estate and what a spouse may need to give up to retain the company.
3. Look beyond selling the company
Ohio law allows a court to consider whether keeping an asset intact makes economic sense. A distributive award can allow one spouse to keep an asset, such as a business, while giving the other spouse a corresponding share of the marital property in another form. This may allow the business owner to retain the company without having to sell or divide the business itself.
The goal is more than splitting the balance sheet
For some business owners, the company is the asset they care most about preserving. A thoughtful divorce strategy should account for that priority while addressing the marital estate fairly.
An experienced family law attorney can help assess the business, determine what may be subject to division and develop a property division strategy around the owner’s goals. Legal guidance can make a significant difference when the outcome could affect both personal wealth and the future of a business.