What Happens to Business Interests During Divorce?
When one or both spouses own a business, divorce often involves additional legal and financial challenges. Whether the business is a closely held company, professional practice, family enterprise, or side venture, it often represents years of effort and can quickly become one of the most contested issues in a divorce. Understanding how business interests are treated during divorce can help business owners protect their interests and avoid costly mistakes.
Is a Business Considered Marital Property?
The first question in any divorce involving a business is whether the business (or a portion of it) is marital property, separate property, or a combination of both.
Generally:
- Businesses started during the marriage are typically considered marital property.
- Businesses owned before marriage may be separate property, but any increase in value during the marriage may be partially marital.
- Commingling marital funds or relying on a spouse’s labor can also create marital interest in a spouse’s business.
What’s important to remember is that even when only one spouse’s name appears on business documents, the other spouse may still have a marital interest. As such, consulting a family lawyer concerning these issues is especially important when business interests are involved in a divorce.
How Courts Value a Business
Once a business interest is determined to be marital or partially marital, it must be valued. Business valuation is often an expensive and contentious process. Courts frequently rely on forensic accountants or business valuation experts to determine fair market value. To this end, the parties may decide to proceed with a joint expert to save costs, or identify competing experts if they are unable to agree as to which expert to select.
Division Does Not Always Mean Splitting the Business
Dividing a business does not necessarily mean both spouses will become co-owners. In fact, courts often avoid creating ongoing financial entanglements.
Common outcomes include:
- One spouse keeps the business and buys out the other’s interest
- The business is offset with other marital assets
- Structured payments are used when liquidity is limited
- In more rare cases, the business may be sold
Can a Prenuptial or Postnuptial Agreement Help?
Yes. Valid prenuptial or postnuptial agreements can:
- Define whether a business is separate property
- Establish valuation methods in advance
- Limit disputes and litigation costs
However, these agreements must meet legal requirements to be enforceable, so consultation with an experienced family lawyer is critical.
Business interests can significantly complicate divorce, but careful planning and experienced legal guidance can make the process more manageable.
If you are facing a divorce involving a business interest, consulting with an experienced family law attorney early can help you evaluate options, preserve value, and avoid unnecessary conflict. Contact our office today to schedule a consultation.











