In Tennessee, most assets you acquire after your wedding are marital property. This is true for businesses as well. Additionally, a business that you owned before your divorce can be found to have a marital interest in it. Other than certain exceptions, such as an inheritance or gift, your property must be divided between you and your spouse – though not necessarily equally.
If you own a business, your entity will likely factor into property division conversations. Suppose your spouse had no direct involvement in building the company. In that case, you probably wonder if you can protect your interests without permanently closing your doors. The answer, in most cases, depends on a variety of circumstances.
Five factors of equitable property division
You must understand what’s at stake before you negotiate the terms of your divorce. A business valuation will determine your company’s worth. It might also be beneficial to hire a forensic accountant.
If you and your ex cannot agree on property division, a court will divide your assets on your behalf. Among many factors, a judge could consider each party’s:
- Earning potential
- Financial requirements
- Contributions to your marriage and/or your business
The length of your marriage will likely enter the equation as well.
What you want might not be what’s best
Dividing the property you accumulated over the years can include intangible personal value, attached to memories of what once was. Therefore, protecting yourself at the end of a marriage can involve more than simply getting what you want.
In Tennessee, Courts will rarely put divorced spouses in the position of continuing joint ownership in a business. Many times, the spouse who is the primary business owner is faced with giving up personal items with sentimental value in exchange for ongoing sole business ownership.
Emotional decisions based on disappointment, hurt or even a desire for revenge can make your life harder after the fact. So, while you might want to keep your ex out of the business, your settlement should consider each party’s contributions during the marriage as well as a long-term approach to what’s best. Ultimately, ensuring that your business interest is properly valued is the first step in ensuring that the Court will fairly distribute property of the marriage.