Divorce and Business Ownership—Who Gets What?

by Mary Stearns-Montgomery
on 24 August, 2017

During proceedings for a divorce in Georgia, the division of marital property is often the subject of disputes, particularly if the couple has significant assets. When these assets include a business, such as a sole proprietorship, a partnership, or a Limited Liability Corporation (LLC), property division can become even more contentious. Dividing business interests in a divorce can have a significant impact on your current and future security, making it important to understand the guidelines the court uses in handling these types of cases.

Divorce and Business Ownership

Under the Georgia Domestic Relations Code, all marital assets in a divorce are to be divided on an equitable basis. This means that rather dividing everything equally, the court will consider the following in making these types of decisions:

  • The length of the marriage;
  • The ages and physical health of the spouses;
  • The income and earning potential of each party;
  • Any career or educational sacrifices either made in supporting the other or in raising their family;
  • The contributions each made in acquiring or increasing the value of property and assets.

Marital property includes items such as homes, cars, and furnishings, as well as financial accounts and pension plan benefits. It also includes any business ownership interests, whether they are jointly owned by both spouses or in just one of their names. This includes individually owned businesses, as well as those owned with family or other partners.

Divorce With a Business Involved

Equitable division generally applies only to marital property and not to assets owned prior to the marriage. However, the Georgia Superior Court may decide that a business owned previously by one of the spouses may be considered if the other spouse made significant contributions to maintaining it or increasing profits.

In making decisions in cases of divorce with a business involved, the first step generally involves getting a professional valuation. INC.com advises that there are three primary ways this can be done:

  • Assets based: This is the simplest and most basic way to value a business. It involves calculating the total amount of profits, debts, inventory, equipment, and supplies to determine the business’ current net worth. The problem is it does not account for any ‘good will’ the business has among customers, which increases the market value. 
  • Discounted cash flow: This involves using current sales figures to estimate future profits, then applying a discount rate to accommodate any unexpected losses or financial risks.
  • Comparables: This method involves evaluating all aspect of the business, and comparing them to similar enterprises to see what other companies are currently selling for.

How Our Experienced Georgia Divorce Attorney Can Help

When going through a divorce involving complicated assets, such as a business or partnership, you need an experienced attorney on your side to ensure your rights and interests are protected. Call or contact Stearns‑Montgomery & Proctor online today and request a consultation with our experienced Georgia divorce attorney to discuss the details surrounding your case. We provide the professional legal representation you need in these types of cases, and can advise you on how to get the most in your divorce settlement.

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