A small business owner going through a divorce may need a strategy for dividing his or her company with a soon-to-be ex-spouse. Even if one spouse did not contribute meaningfully to a business, Ohio law still requires a fair split of all property acquired during a marriage.
A separate business acquired before a marriage, however, may still require a fair division during a divorce. As noted by the Ohio Laws and Rules, a spouse who contributed substantially to another spouse’s separate business and improved its value may have a right to ownership or its fair value.
A separately owned business that could not have flourished without the other spouse’s particular skills may require negotiation to divide its income fairly. If an individual worked at a spouse’s separate business as an employee, the divorcing couple may need to formulate a new agreement if they plan to operate the business together after the divorce.
As noted by the American Bar Association, if an individual’s skills or professional license contributed significantly, one spouse may need to buy out the other. A professional third-party appraisal may provide a fair market value to offer as part of a reasonable buyout arrangement.
Some divorcing couples may find that selling a business and dividing its proceeds offers them a reasonable opportunity to amicably go their separate ways. Based on how much each individual contributed to generating the business’s revenue, the division of its net proceeds may require some negotiation. To reach a mutually agreeable arrangement, each spouse may need to consider giving up a portion of another shared marital property.
.png){kind=icon}