ASSISTING FAMILIES THROUGH DIFFICULT TRANSITIONS
Experienced, Meticulous Division Of Property In Divorce
The basic rule applied by the court in the disposition of marital property is that one-half of the property or its value is awarded to the husband and one-half to the wife. The court may award to one party the entire interest in a marital asset, while awarding the other party a greater portion of pension or retirement benefits. In general, the court’s goal will be to equalize the value of the assets and liabilities awarded to each party.
If you’re facing divorce and own a closely held business, it’s important to understand the financial issues involved in determining the division of marital assets, child support and spousal maintenance. In order to protect your interests, contact divorce attorneys at Mowery Youell & Galeano today to schedule an appointment and discuss your case.
Effect Of A Prenuptial Agreement
Occasionally, persons with substantial assets, including businesses, will enter into an agreement before marriage providing for disposition of assets and spousal support in the event of termination of the marriage. In such cases, that agreement will generally be upheld if the court finds that:
- the agreement was fair at the time of its execution
- each party fully disclosed his or her assets prior to execution
- each party entered into the agreement voluntarily and without coercion or duress
Where the parties are the owners of one or more businesses, the court may order an appraisal of the business(es) and award one-half of the fair market value of the business paid to the spouse not involved in business operations. This will occur only where there are insufficient assets to award to the spouse in lieu of his/her one-half interest in the business. For example, many times the spouse not involved in the operation of the business may be awarded the marital residence as well as other assets sufficient in total value to equal one-half of his/her interest in the business. The spouse managing the business will then be awarded all ownership interest in the business.
When Both Spouses Are Involved In A Closely Held Business
If both spouses are involved in the daily operation and management of the marital business, there are many options available to divide the marital interest in the business. The nature of this division is more complicated and would require a consultation with us.
The actual legal ownership of the stock of a family corporation is not a controlling factor. If the business was founded and developed during the marriage, it will be considered a marital asset.
Considering The Value Of A Business
The valuation of the business for purposes of the settlement may be the most important act performed with regard to the property settlement. Valuation can be approached several ways. One may capitalize earnings, look at the market value of underlying assets, consider the value of the business if sold, consider trends in earnings (whether up or down), give weight to particular customers or projects, and consider the unique role of the owner. Any or all of these approaches may be appropriate. A coordination of the efforts of the lawyer, the valuation expert and the business owner will determine the best valuation approach.
In addition to determining the fair market value of the business, the valuation expert may also be able to determine/calculate the actual income, as defined by Ohio law, available to be paid to a spouse/owner of the business for the purpose of calculating spousal and child support payments.
Double Dipping In Business Valuations And Spousal Support Determinations
However, in the past business owners have essentially had the value or income from their business counted against them twice in divorce settlements — once when dividing marital property and again when determining alimony. Recently, in Heller v. Heller, our office represented a business owner in order to stop this practice. If you have questions about how your business could impact your spousal maintenance payments, our attorneys can meet with you and discuss current law and how we can help you.
For more information, contact an attorney at our firm. From our office in Dublin, we represent clients throughout the Columbus metro area and central Ohio.