Dividing a Business While Going Through a Divorce in North Carolina
Dividing a business can be one of the most complex and contentious aspects of separation and divorce. With emotions running high and substantial financial stakes on the line, it’s essential to understand the legal and practical facets of this process.
Equitable Distribution in North Carolina
First and foremost, North Carolina follows the principle of “equitable distribution” when dividing marital property. This doesn’t necessarily mean a 50/50 split; instead, assets (including businesses) are divided in a manner deemed fair by the court.
Classifying Property as Marital vs. Separate
Before diving into the specifics, it’s crucial to distinguish between marital and separate property. If a business was started or acquired during the marriage, it’s typically considered marital property. If it was founded or bought before the marriage, it might be viewed as separate property, but any increase in its value during the marriage could still be subject to division.
Business Valuation
Before dividing a business, it needs to be accurately valued. This involves understanding its assets, liabilities, and potential future earnings. Often, both spouses will hire their own experts to conduct valuations. If these experts present vastly different numbers, the court may have to decide which value to adopt or may order a third, independent valuation.
Distribution of the Business
There are three primary methods for effectuating a division of a marital business:
- Buyout: One spouse buys out the other spouse’s interest. This is common when one party has a deeper attachment or role in the business.
- Co-ownership: The ex-spouses continue to own the business together. This approach can be challenging given the potential for conflicts, but it’s feasible if both parties can maintain a professional relationship.
- Selling the Business: If neither spouse can buy the other out and co-ownership isn’t feasible, selling the business and dividing the proceeds might be the best option.
Premarital and Postnuptial Agreements
These legal documents can provide clarity and streamline the division process. If there’s an agreement in place that outlines how the business would be treated in a divorce, it can significantly reduce disputes and litigation.
Seek Experienced Counsel
Given the complexities of business valuation, equitable distribution, and the intertwining of personal and professional interests, it’s paramount to have knowledgeable legal representation. An attorney experienced in both family and business law can offer invaluable guidance.
Dividing a business during a divorce in North Carolina is no straightforward task. It’s a fusion of emotions, financial intricacies, and legal nuances. By understanding the state’s approach to equitable distribution and seeking expert guidance, both parties can navigate this challenge in a manner that safeguards their financial and personal interests.
Get in Touch with Our Experienced Family Lawyer in North Carolina
Going through a divorce is tough, especially when you own a business. But you don’t have to figure it all out alone. At Younce, Vtipil, Baznik & Banks, P.A., our family lawyers are here to help you understand your rights and make sure your business is treated fairly during the divorce. We know the laws in North Carolina inside out and will work hard to protect what you’ve built. Don’t let the stress of divorce put your future at risk. Reach out to us today to set up a meeting. Let’s work together to start your next chapter on solid ground.
About the Author
Younce, Vtipil, Baznik & Banks, P.A.
At Younce, Vtipil, Baznik & Banks, P.A., our clients work closely with a legal team that is dedicated to providing outstanding client service and unflinching legal representation. The majority of our attorneys and support staff have worked with our firm for many years.
