Pursuant to Tennessee law, marital property is supposed to be divided fairly, though not necessarily equally. And these matters can get even more convoluted when you have a family business.
If you mishandle division of the business during your divorce, then you could miss out on an opportunity to secure the financial resources you need moving into the next phase of your life. With that in mind, let’s look at some strategies that you can implement to protect your interests when a family business is implicated in your property division.
How to deal with a family business during property division
Although there isn’t a cookie-cutter approach that’s applicable to all divorces involving a family business, there are some strategies that you can likely implement to help protect your interests. Here are some of them:
- Proper valuation: Before even broaching the topic of business division, you have to know what the family business is worth. There are several ways to valuate a business, too, so make sure you choose the methodology that makes the most sense and that best positions you for a favorable outcome. Facts such as comparable business sales in your area, the business’s current income, and anticipated market conditions can all play a role in the ultimate valuation of your business.
- Creative division solutions: When we talk about property division, a lot of people think of splitting assets down the middle. In the business context, that would necessitate selling the business and dividing the profits. While that’s certainly an option in your divorce, it’s not the only avenue available to you. Remember, division doesn’t have to be 50/50. So, you might have creative solutions available, including bartering with other marital assets to keep the family business to yourself. Just make sure you’re conducting a thorough financial analysis to ensure that you’re making a decision that supports your long-term financial stability.
- Separate property considerations: Although most businesses wind up part of the marital estate, that’s not always the case. Sometimes a business is brought into the marriage and is truly kept separate, thereby removing it from the property division process. In other cases, the business is removed from the marital estate by a prenuptial or a postnuptial agreement. Be sure to analyze your business from this point of view to see if there’s a way to incorporate or remove the business from the marital estate depending on your needs.
- Consider your spouse’s financial goals: Heading into the property division process, each party is going to have pre-defined goals that they hope to achieve. If you can anticipate your spouse’s, then you might be in a strong position to negotiate an outcome that’s favorable to you. You might be able to use the business, the family home, or other assets as leverage to push your spouse towards an outcome that you want.
Don’t miss out on an opportunity to secure a favorable divorce outcome
You only get one shot at your divorce. If you haphazardly put together your divorce legal arguments, then you’re bound to reach a bad outcome.
Don’t let that happen to you. Instead, diligently work to build a persuasive and effective divorce strategy. That way you can rest assured that you’ve done everything possible to protect your interests and fight for the bright future you deserve. Remember, you can and will get through this. How successfully is up to you.