An important issue to determine in a divorce is the distribution of property between the former couple as it details their finances from that point on. Spouses should be aware of the rules governing this division and how property is classified and valued.
The distribution of a family business subject to a divorce can be a complex matter. Such a business is considered an asset and must be planned for and distributed appropriately. Courts are often reluctant to liquidate a business due to a divorce solely to provide each spouse with an equal portion of the asset. Additionally, each spouse must have their involvement and interests in the business documented properly to ensure their rights. This includes placing the names of each spouse on all ownership and title documents. An agreement between the spouses before or after the marriage can define how the business can be divided and simplify the distribution process. Finally, an appraisal should be performed to correctly value the business and ensure that each spouse gets an appropriate share.
The state of Georgia, like the majority of states in the country, applies the equitable distribution method to property division. Under this method, marital property is divided between the spouses based on what is fair under the circumstances of their case, but such division does not have to be equal. To determine what property is subject to such distribution, the assets of the spouses must be classified. Separate property is property that was obtained through inheritance or gift or acquired before the marriage. Any property acquired during the marriage is considered marital property and will be divided between the spouses. A family business, if created during the marriage or sustained by the marriage may be considered marital property to be distributed based on the information mentioned above.
Property division is extremely important during the divorce process as it defines the assets to which each respective spouse will use to live on after the marriage. A family law attorney can assist a spouse during this process and explain the rules governing property division in their state.
Source: WOOD TV NBC, "Dividing a family business after divorce," Jan. 14, 2014