Property is divided in a Minnesota divorce proceeding based on a ‘just and equitable’ division of assets and debts. While this division is not necessarily an equal division of assets, property division is generally based on relatively straightforward math. However, when one or both parties own a business, things can get complicated.
Many divorcing couples are under the impression that business interests are separate from marital property. This is not true. A business interest is considered marital property subject to division, unless one party can prove that the business is non-marital (for more information on non-marital property, click here).
If the business has non-marital aspects, the Court may look at the value of the business as of the date of marriage and the date of valuation for the divorce and decide that the growth of the business during the marriage is marital property. Importantly, just because this is considered marital property does not mean that you will not be awarded the business as part of the divorce. This simply means that you will be assigned a value for the business in your “column”, which may impact the property equalizer payment.
Another option, depending on your specific circumstances, may be to sell the business and divide the assets as part of the divorce. This typically makes more sense for couples who operated the business together during the marriage, and no longer wish to continue this business relationship after the divorce is finalized.
If you have any questions about how your business may impact a divorce proceeding, please call me today at 651-647-0087 or reach out via our online contact form to set up your free consultation.