What Happens to a Joint Business in a Divorce in Minnesota?
Divorcing couples in Minnesota who co-own a business face unique challenges as they navigate the division of marital property. A joint business is often one of the most valuable assets in a marriage, and its fate depends on various factors, including the nature of the business, each spouse’s contributions, and their future goals. So, what is a Joint Business Divorce?
Under Minnesota law, marital property—including jointly owned businesses—is subject to equitable distribution. This doesn’t necessarily mean an equal split but rather a division that the court deems fair.
Step 1: Valuing the Business
The first step in addressing a joint business is determining its value. This often requires hiring a professional appraiser or forensic accountant to assess the business’s assets, liabilities, income, and goodwill.
Step 2: Dividing the Business
Once the business’s value is established, the divorcing couple has several options:
- Buyout: One spouse may choose to buy out the other’s share, retaining full ownership of the business. This option requires the purchasing spouse to compensate the other, either with a lump sum payment, installment plan, or offset through other marital assets like real estate or retirement accounts.
- Selling the Business: Another possibility is selling the business outright and dividing the proceeds. While this approach provides a clean break, it may not be desirable if the business is thriving or holds sentimental value. Selling can also be time-consuming, especially if the market conditions are unfavorable.
- Continued Co-Ownership: In some cases, both spouses may decide to continue operating the business together after the divorce. This option requires a high degree of trust and collaboration, as well as clearly defined roles and responsibilities. Establishing a formal partnership agreement or revising existing business contracts can help minimize conflicts and ensure smooth operations post-divorce.
Step 3: Considering the Contributions of Each Spouse
Minnesota courts consider each spouse’s contributions to the business when dividing its value. Contributions can include financial investments, management responsibilities, or support provided at home while the other spouse focused on growing the business. Courts may also account for whether the business existed before the marriage, as premarital portions may be excluded from the marital estate.
For divorcing couples with a joint business, working with experienced legal and financial professionals is essential. An attorney skilled in Minnesota family law can help negotiate a fair settlement, while a financial expert can provide accurate valuation and tax planning advice.
Contact a Minnesota Family Lawyer Today
For divorcing couples with a joint business, working with experienced legal and financial professionals is essential. Our experienced team is here to guide you through the divorce process and ensure that your interests are protected. Contact North Star Law Group’s Family Law Team today for a consultation!
