business assets

How to Divide a Family Business without Affecting Your Company

January 20, 2021 by David Betz

The court needs to determine if your family business is indeed marital property and how much of it can be divided between spouses.

Divorce is a delicate situation since two spouses’ common life must now be evaluated and divided, from family assets and debts to how much time each spouse gets to have with their own children. It is clear that divorce isn’t always plain and simple or developing as both sides would expect.

Law Property States Vs. Community Property States?

The way marital assets are treated during a divorce depends from state to state. There are two big distinct law approaches to this: law property and community property. Let’s start with the latter, as it is less common.

In common property states, all marital assets (which were acquired from the time of marriage until the divorce is declared) are considered community property, which means both spouses share the ownership equally. That means everything is divided in half, whether it’s the marital home, real estate, bank accounts, retirement funds, etc.

Missouri is a law property state, which means dividing the family assets is done by separating them into non-marital assets and marital assets, then splitting the marital assets into two parts in an equitable manner. Equitable doesn’t always mean 50-50, as we will detail further.

Dividing a Family Business during a Divorce in Missouri

First of all, the court needs to determine if your family business is indeed marital property and how much of it can be divided between spouses. If you started your business by yourself before getting married, one would think it’s your business, and it’s untouchable, but it depends on various circumstances.

For example, if your business grew during your marriage and your spouse was in any way involved in the company, that growth can be considered a marital asset. If the business started during your marriage, it would probably be considered marital property since it was probably funded with common funds.

Since a business is not so easy to just split and share, as it would be with liquidities, it may be tricky to settle how exactly you will divide it between yourself. An option would be for one spouse to give away other goods from their non-marital assets that would be equal in value to the business share the spouse would’ve received. That way, the business would not be affected.

Another option, much less desirable, though, would be to liquidate your business and easily split its value. But, ending a business is generally not the ideal option.

How to Get the Best Outcome for Your Business During Divorce?

The best way to protect your family business during divorce is to negotiate with your spouse and see if they are willing to leave the business to you and be compensated in other ways. If not, decide how to share the interests of your business.

If you think that your soon-to-be-ex-spouse will sabotage your business in any way or if you see any signs of retribution, discuss a plan with your St. Louis divorce lawyer and collect any evidence of bad intentioned actions from your spouse.

Speak With an Experienced Attorney

Our firm uses experience, good communication, and availability to help families get through life changing events.

Call (314) 801-8488

Jan 22, 2021 @ 7:35 pm

Factors to Consider in a High-Asset Divorce Case

July 31, 2017 by David Betz

High-asset divorce cases are often complicated and benefit greatly from the assistance of a St. Louis divorce lawyer.

Most divorce cases are usually accompanied by issues such as tax consequences, alimony, and property division. However, it can get even more convoluted when the couples have highly valuable assets. Due to the complications and the high stakes involved in such a divorce case, the involved parties ought to consider several factors. In this article, we will discuss these factors.

Identification and Categorization of Assets

It is often difficult to identify and categorize assets in a high-asset divorce case. Most of the assets acquired before marriage are considered apart from the rest. However, for some assets, this is not usually the case because of value appreciation. Some couples with high-value assets sign a prenuptial contract to apply property rights and reduce complications in the event of a divorce.

Evaluation of Assets

Assets in a complicated divorce often call for special evaluation. It becomes extremely necessary when businesses are involved. In this case, the opinion of an expert is needed to ascertain the worth of business on the basis of goodwill, debts, accounts receivable and annual statements. In addition, assets like retirement accounts, stocks, intellectual property, investment, and profits will also need special evaluation.

Tax consequences

Most people find tax and tax-related topics tedious and uninteresting. That said, major tax concerns are bound to arise when dividing high-value assets. The spouse that receives certain assets, for example, may end up being taxed on the distribution. Spouses involved in a divorce may be ignorant of the tax consequences of such as business entities, spousal maintenance, and benefit plans among others. It is highly advisable to put into consideration the possible implications of taxes and more importantly, involve a lawyer who will simplify the implications for them.

Duration of Proceedings

Owing to the complicated nature of these high-asset divorces they often end up taking longer than usual. The endless processes of evaluation, categorization, and division of assets are extremely burdensome and take a lot of time. Therefore, ephemeral orders for legal expenses, custody matters and spousal maintenance need to be put into place. These complications sometimes push the parties to prefer an undisputed divorce and avoid the whole process altogether.

Celebrity Couples

In case the involved parties are public figures, the whole process should be handled with care. If details of marital issues and the case proceedings are leaked to the media, they may be aired to the public making matters even more complicated. The couple may end up suffering more emotional damage than they already are. It is, therefore, important to make use of a family lawyer who will enforce privacy protection measures like going through mediation, acquiring gag orders or sealing the court proceedings.

St. Louis Divorce Attorney

These factors barely cover the complicated details of a high-end divorce case. Nevertheless, they are important in helping to reduce the stress that such a divorce brings. The involved couples ought to take them into consideration. They may seem minor but they go a long way in saving time, money and emotional pressure. It is even better to hire a St. Louis divorce attorney who will help with the whole process.

Contact The Betz Law Firm today for a free 30-minute phone consultation by calling (314) 801-8488 or by filling out our online contact form.

Jun 3, 2020 @ 9:40 pm

Division of Business in Divorce – St. Louis Divorce Attorney

February 24, 2017 by David Betz

Division of business in a divorce can be a contentious issue. Missouri is a dual property state and follows an equitable distribution policy. For property division, the Missouri court will first classify assets into marital assets (acquired during or after the marriage, or assets that have increased value due to the marriage), which are divided between the couple, and separate assets (that have been solely acquired before the marriage, inherited bequests, gifts or assets acquired with separate funds) that are not subject to division in a divorce. St. Louis divorce attorney explains this in detail.

Division of business in a Divorce

Dividing a business in a divorce is a complicated procedure. Categorizing assets into marital or separate assets presents several challenges. There are many factors that define the division of business and determination of the business into marital or separate. They are –

Date of marriage and date of commencement, investment or acquisition of shares of a business by one or both spouses.
The source and the number of funds used to fund the business
Amount of money contributed by both spouses in the business
Other non-tangible aspects like the amount of time, interest and work put in by either of the spouses towards the business.

While these factors can help define a business as marital or separate, the division is not determined by these factors only.

Valuating a business

Once the business is defined as marital property and a spouse’s valid interest is determined, the court seeks to determine and calculate the value of the business. This determination is done by using either one of the following three methods –

1. Asset formula – Asset-Liabilities = Value
Assets can be categorized into tangible and non-tangible. Where tangible assets include physical (touchable) assets like inventory, infrastructure, etc., non-tangible (non-physical) assets are accounts receivables, patents, goodwill, etc. However, the asset formula cannot be used for unrecorded assets and liabilities and the method is often used for smaller businesses.

2. Market Approach – The market approach compares the business to other similar businesses that have been sold in the market. The market approach, however, can pose to be a problem if no ‘similar’ sold businesses are available for comparison.

3. Income Approach – The income approach is a commonly used method where formulas and historical data are used to predict cash flow and business profits. In the income approach also calculates future benefits and rate of returns and risks.

Business Evaluation

While the value of small businesses can be evaluated by both the parties and then divided, bigger businesses with complexities need the expertise of an evaluation expert. These experts often qualified as Certified Business Appraiser (CBA) or an Accredited Senior Appraiser (ASA), look into the history, assets, finances, and liabilities of the business in order to evaluate it.

For a business that has a high monetary value, both the parties can seek to appoint different independent experts. After the experts determine the value of the business and testify their respective findings to the court, if the parties end up in litigation, it is up to the judge to give the final decision.

Get in touch with an experienced and competent St. Louis divorce lawyer for more information.

Aug 2, 2019 @ 3:54 pm