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What happens to the family business in a divorce?

On Behalf of | Dec 29, 2022 | Family Law

While divorce can be the right decision for couples who need a change in lifestyle to facilitate future happiness, it also comes with a great deal of uncertainty. Until all separation matters are final, it is impossible to fully predict what will become of your new routine, your family dynamic and your business.

In most cases, some or all of a privately owned business is marital property shared by both spouses in a marriage. When a family business is on the table, it also tends to be one of the most highly contested assets in the divorce, so it is important to understand what will happen to the business and how you can pursue continued control over it.

How does the court divide a business during a divorce?

Colorado statutes on domestic matters outline a process of equitable distribution of marital assets in a divorce. This means that property acquired during the course of a marriage is subject to an even split between spouses, and this includes business assets. In order to evenly split business-related assets, it may be necessary to conduct a thorough valuation and then liquidate the business to fairly distribute the finances.

How can you protect your stake in the business?

The principle of equitable distribution makes it possible to negotiate with your spouse to maintain ownership of the business in exchange for other marital assets of equal value. A common method for finalizing this type of negotiation is by signing a prenuptial or postnuptial agreement with your spouse.

Your business is a large part of your livelihood and a symbol of your hard work as an entrepreneur. Knowing how to protect the business and continue your operations as normal even through a divorce can be key in maintaining your current quality of life.

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