Before you filed for divorce, the business owner probably considered the business 
extremely valuable, and the spouse was not so sure. After you file for divorce, the business owner may not be so sure, but the spouse’s attorney may now view the business as extremely valuable.
The issue here is to somehow place a value on the business before the marriage and place a new value currently. The amount of increase in value is an asset that must somehow be divided. The values must be presented to the court with whatever evidence is available. If the business owner is not willing or able to sell the business, then in theory, the non business owner should be entitled to assets of equal value.
It is not uncommon that both spouses own a business. In many of those cases, a spouse received their interest in a business prior to the marriage, either from a family member, or otherwise. With regard to premarital assets and/or any other assets that a party claims is exempt, that party must prove that the asset is truly exempt. The inquiry doesn’t end there. If the asset is an active asset, like a business, the other party may share in the increase in value of the business during the marriage. Typically, the non-titled spouse will share in the increase in value if they can show that they contributed to the increase by make financial or non-financial contributions.
Another issue is determining what non-financial contributions may look like. The non-owner spouse can contribute to an asset’s appreciation in a number of ways. For instance, a non-owner spouse can provide the necessary support that allows his or her partner to devote time and energy to a business. For example, a spouse who “took care of the home, worked part – time and raised [their son]” contributed to an asset’s appreciation).
Just because a business is not profitable, does not mean that it has no value. An unprofitable business may still have a positive fair market value. For instance, a business can have valuable tangible assets or inventory, as well as intangible assets, such as goodwill and customer lists.
Despite the often espoused notion that businesses are never divided 50-50, the increase in value of the business is, in fact, very often equally divided. If you are facing a divorce and a business is involved, your first concern should be to retain an competent attorney.
Steven W. Hair, focuses his practice as a divorce attorney, family law attorney in Clearwater, Palm Harbor, and Safety Harbor.
For more information, visit our website at www.FamilyLawClearwater.com
or call (727) 726-0797.