Divorce can be complicated for any couple, but when a family business is involved, the process can become even more challenging. Maryland law treats family-owned businesses as marital property, meaning they are subject to division during a divorce. Understanding how this affects both spouses can help reduce confusion and stress during the divorce process.
Assessing the value of the family business
One of the first steps in handling a family business in a divorce is determining its value. This can be tricky, as the business may have both tangible and intangible assets. A business valuation expert often helps establish an accurate worth. Factors like profits, growth potential, and even the roles each spouse plays in the company may come into play. Maryland courts strive to fairly distribute the value of the business, but the process can be lengthy and complex.
Who owns the business?
If one spouse owns the business before the marriage, only the increase in value during the marriage may be subject to division. However, if both spouses worked in or contributed to the growth of the business, the court may consider both parties’ involvement. Even if one spouse does not directly work in the business, their contribution to household duties or financial support may still factor into the division.
Options for handling the business in divorce
When it comes to the family business, couples have several options. One spouse may buy out the other’s share, or they could agree to sell the business and split the proceeds. In some cases, both spouses may continue running the business together after the divorce, though this often requires a clear agreement on the terms.
Running a business together after a divorce can be tricky, and it’s essential to have a clear understanding of the future role each person will play.