How to split the marital property is often one of the biggest issues in a high-asset divorce. However, when there is a family-owned business involved, matters can be even more complicated.
What happens to your business when you divorce in Connecticut?
How Connecticut law treats business property
The value of each spouse’s ownership stake in a family business is usually considered marital property that the court will divide according to the property division laws of the state. This is the case even when one spouse is not specifically listed as an owner of the business.
Common business property division issues
One of the most common issues that arise when dividing business property is reaching an agreement on valuing the business. If you have a buy-sell or similar agreement in place, the terms of that agreement may dictate how to value the business. Otherwise, if you can not reach an agreement with your spouse, the court may decide.
Another common issue is that family businesses tend not to be liquid assets that can be easily divided. If one or both spouses want the business to continue, they may have to negotiate a buy-out that will not prevent the business from continuing to operate.
If both spouses want to continue the business, they may also have to negotiate who gets to retain an ownership stake in the business after the divorce.
In most cases, all parties can benefit from an agreement made before the divorce happens. However, if that agreement does not exist, the parties must either negotiate one or risk allowing the court to decide for them.