Small businesses are the backbone of the U.S. economy. Often these are run as a family operation with children and spouses directly involved. At other times the owner treats the small staff as family. In either case, the business’s ongoing viability or future is a significant worry for small business owners considering divorce. What was once an ideal extension of their home life now becomes a potential casualty of the divorce.
Property division in Colorado
Colorado is an equitable distribution state, which may not mean that the spouse gets half the business. In fact, there are several factors to weigh in dividing the business:
- Prenup: A valid pre- or post-nuptial agreement will maintain whatever arrangement in that contract dictates.
- Started before the marriage: Assets owned before marriage generally remain with the individual unless circumstances change, such as a significant increase in value or the family’s finances comingle with the business’s, which is typical.
- Value: There will likely be disagreements over the business’s value, which could also fluctuate during normal business cycles. This issue must be addressed as part of determining the overall value of the marital estate.
- Other partners: Business partners may not be happy if they get an unwanted new partner if the spouse receives a piece of the company.
- Co-ownership: Some couples are business partners as well as life partners. Ideally, the divorce will not affect the working relationship, but often one will buy out the other. They could also sell the business to a third party or close it.
This is a common issue
The division property can be a sticking point in any divorce. However, because small business ownership is so common, attorneys who handle divorces often represent business owners or spouses. They understand all the factors outlined above and can provide creative solutions that allow the business to continue thriving after couples go their separate ways.