Business assets, like other marital assets, are subject to division or some other form of consideration in a Colorado divorce. It does not matter if those business interests are held solely by one spouse, by both spouses or by one party and other business associates. How business assets are treated varies on a case-by-case basis.
The following is an overview of how business assets are typically treated in a Colorado divorce. If you are facing a Colorado divorce and are concerned about how a divorce could impact your business, contact an experienced Denver divorce attorney for personalized advice.
Dividing Business Interests in a Colorado Divorce
How business assets are handled in a Colorado divorce depends heavily on when a business was started or acquired. Businesses started during a marriage are usually considered marital property and are subject to equitable division by the court.
When one spouse begins a business before marriage, any appreciation in the value of that business during marriage is typically subject to division or other offset upon divorce. Increases in the value of a business during a marriage are generally viewed as a marital effort and are therefore divisible as marital property.
The fact that the business interest is a professional practice that cannot be sold, or that the non owner spouse is not qualified to participate in the business does not keep the business interest from having a marital value in divorce. However, considerations like that do affect the available options for dividing that marital value.
Assessing the Value of Business Interests in a Colorado Divorce
Before any business assets can be divided in a Colorado divorce, those assets must be valued. Divorcing spouses may do any of the following when assigning a value to their business interests:
- Each employ an expert to appraise their business;
- Agree on an expert to appraise their business assets as a joint expert; or
- Agree on a value for their business assets without an expert.
Forensic accountants or other similarly qualified valuation professionals are often helpful when determining business values and appreciation of businesses during a marriage. Unless the non-participant spouse is already knowledgeable about the specific business it is often unwise to agree on a value with a business-owner spouse without thoroughly investigating business assets.
Once a value is established for business interest, the spouses can work with an experienced Denver property division attorney and move on to asset division.
Examples of Business Asset Division Agreements in Colorado
Spouses may make their own property division agreement in a Colorado divorce, or the court may order an arrangement on their behalf.
A business-owner spouse may want to maintain their business intact and request to do any of the following:
- Buy out the non-owner spouse at the time of the divorce;
- Trade the non-owner spouse for other similarly valued marital property; or
- Make monthly payments to buy out the non-owner spouse over time.
Spouses may choose to sell their business interest and divide the sale proceeds in lieu of a buyout, although this may be unwise if it leaves the business participant without a source of income. Occasionally spouses may agree to continue to run their business jointly. However a court is unlikely to order the spouses to continue in business together after a divorce over their objection.
Protect Your Business Interest with a Prenuptial or Postnuptial Agreement
You can plan to protect your business assets by signing a prenuptial or postnuptial agreement with your spouse. A prenuptial agreement signed before marriage can establish your business assets as your sole property in the event of divorce.
A postnuptial can do the same, but it is signed after you are married to your spouse. You can discuss either of these or asset planning in the wake of a divorce by calling an experienced Denver divorce attorney today.
Contact an Experienced Denver Divorce Attorney Today
No two Denver divorces are alike. You need representation that is prepared for all of life’s complexities.
At Hogan Omidi, PC, our Denver family law attorneys are knowledgeable and experienced. We fit our representation style to your case and needs.
The attorneys at Hogan Omidi, PC, can do this because of our extensive skill set and resources. In fact, we “wrote the book” on family law in Colorado.
Call Hogan Omidi, PC, now to discuss your upcoming divorce case and learn how we can help you.