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What Happens to Your Small Business During Divorce?

Debbie Crosby Pelerose, P.C. April 16, 2021

With a few exceptions, in Georgia most types of assets that either your or your spouse acquire during marriage automatically become joint marital property. On the other hand, assets acquired before marriage remain separately owned unless mingled with marital property.

However, if you and/or your spouse are business owners, determining how much, if any, of the business’ interest is marital property can be especially complex.

Determining Whether Your Business Is Marital Property

If you and/or your spouse started your business during your marriage, the law considers the interest in the business to be marital property, regardless of titling. That means that the court may divide the business’ holdings equitably between you and your spouse.

If you or your spouse created the business before you married, the business remains separate property. However, this does not necessarily mean that the non-holding spouse does not have a right to a portion of the business’ interest during divorce.

For instance, if your spouse owned the business prior to your marriage but you contributed money or labor to its success, you may be eligible to receive a portion of your contribution. Similarly, if the business earned income during your marriage, that income may be divisible marital property.

Ensuring a Fair Division with A Thorough Business Valuation

Whether you and your spouse own the business jointly or solely, business valuation is essential for ensuring that one party does not deceive the other about the true value of the company.

In addition to providing objective oversight, a trained business valuator should be able to identify and appraise all business assets, including income as well as the value of both tangible and intangible property.