One of the most complex and contentious matters during a Rhode Island divorce
is the issue of property division. If you or your spouse owns a business,
this process can become even more complex. Who will retain control of
the business after the divorce? How much is the business worth? To answer
these questions, the courts will consider the following factors:
- Whether the business was started before or after the date of marriage
- Whether the business was a gift or inheritance
- Whether the business is a sole proprietorship or professional practice
- Whether the non-owning spouse contributed to the business’ success
Depending on the court’s findings, the business will either be included
or excluded from your and your spouse’s marital property. If deemed
marital property, the courts will then be tasked with determining a business’
value to ensure you both receive a fair share. Determining how much you
will each receive, however, can be complicated.
While appraising and dividing assets such as homes, vehicles, and other
belongings can be relatively straightforward, businesses are complex entities
that can be made up of a wide range of tangible and intangible assets,
including inventory, land, intellectual property, good will, equipment,
and bank accounts. To accommodate for this complexity, an appraiser is
usually retained to accurately assess the value of the business.
The following methods may be used to appraise your business:
Asset approach: The fair market value of the business is calculated by adding together
the total amount of all assets, both tangible and intangible, and subtracting
all company liabilities.
Income approach: The business is valued based on anticipated economic benefits, such as
Market approach: The sales of the business are compared to those of other similar businesses
to forecast the company’s value.
Once reports have been created, you and your spouse will be given the opportunity
to negotiate with each other towards an agreement to have one of you “buy
out” the other’s share of the business, either through a cash
payment or property settlement. If you and your spouse are unable to come
to a mutually acceptable arrangement, the courts will step in and issue
a decision that determines an equitable division for you and your spouse.
Divorcing? Call TJC ESQ Today
No divorce is simple – and it is not a process you should consider
going through alone. At TJC ESQ, our award-winning Providence divorce
lawyers have been helping couples simplify their divorces for more than
30 years and can provide the compassionate guidance you need to get through
this time as smoothly as possible.
To find out more about what our team of attorneys can do for you, call
(401) 216-4414 or schedule a confidential case evaluation
today to get started.