If you own a business, it is important to understand how your company will be treated in the event of a divorce. This is especially true if the business is closely-held or has significant financial value.
In Indiana, business property is considered marital property and is subject to equitable distribution. However, this does not mean that it will be awarded equally.
Get a Good Valuation
One of the most important things a business owner can do to protect their business in an Indiana divorce is to get a good valuation. A valuation is a way of measuring the value of the business and determining how much each spouse should receive in the division of property.
A good valuation is based on what a reasonable buyer would pay for the business and the value of the assets that make up the business. There are several different ways to determine a valuation, and choosing the right method depends on your situation. It is also important to consider whether the valuation will be used in court or is intended only to assist in dividing assets.
Many owners think that their business should be valued based on a multiple of earnings or annual sales. However, this formula is rarely accurate and is unlikely to maintain merit if the business is sold or is involved in litigation.
Another approach to valuing a business is based on the value of going concerned, which reflects the current market value of a company. This approach also includes issues such as goodwill and intellectual property. Often, a going concern valuation results in the highest value of a business.
When one spouse runs a business, it can be difficult to establish how much of that goodwill remains. This is because the spouse may have invested their time and expertise in the business, which can affect the value of that goodwill.
If you are a business owner in an Indiana divorce, it is best to have an experienced attorney represent your interests during the valuation process. A good attorney will be able to provide you with expert guidance on how to value your business and will help you to avoid common pitfalls that can lead to a poor valuation or an unfair division of your business.
An experienced Indianapolis business valuation attorney can also assist you with a complex or high-asset case that involves a business, investment properties, extensive retirement and pension benefits, or hidden asset problems. Having an accountant and an attorney well-versed in the laws regarding high-asset property division can help you reach an equitable distribution of your assets.
Get a Prenuptial Agreement
One of the most important things a couple can do to protect their business in an Indiana divorce is get a prenuptial agreement. These agreements are designed to help couples ensure that their assets will be divided fairly in the event of a future divorce.
While a prenuptial agreement cannot address issues like child support or custody, it can address other matters that may arise in the marriage, such as the division of property, the characterization of assets as separate property, waiver or disposition of spousal support rights, protection of family business assets, inheritance rights and more. It can also include stipulations regarding living expenses and other factors that may be relevant in the divorce process, such as who will pay debts incurred before the marriage and how these obligations will be allocated after the separation.
The prenuptial agreement should be in writing and signed by both parties. Additionally, it should contain full disclosure of both parties’ financial assets and debts. A court may invalidate a prenuptial agreement if the agreement is so unfair that it would be an injustice to enforce it or if there is evidence that one party was under duress when it was signed.
An Indiana business owner should always talk with an attorney about what kind of agreement will best suit their specific situation. The attorney can guide them through the process and discuss the many legal options available to them in order to best protect their assets during and after the marriage.
Ideally, a business owner and his or her fiancé will have thoroughly addressed these issues in a prenuptial agreement before getting married. This will not only make it much easier to resolve any disputes that may arise during the marriage, but it will also give the business owner a sense of security and peace of mind in the event of a future divorce.
A prenuptial agreement should also be accompanied by a revocation provision specifying that it can only be revoked by the parties signing and recording a revocation. The revocation should also be recorded in the county records so that other parties who deal with the couple can determine whether or not the agreement is still in effect.
Get a Postnuptial Agreement
If you are currently married and have a business, you can protect your assets in the event of a divorce with a postnuptial agreement. However, not all states recognize them, so speaking with an experienced family law attorney is important before entering into one of these agreements.
In Indiana, some specific requirements must be met before a postnuptial agreement can be considered valid. These requirements ensure that both parties voluntarily agree and that the terms of the agreement are fair.
The main reason that people enter into a postnuptial agreement is to protect their assets in the event of a divorce. They can also help ensure that they receive spousal support or child custody/visitation in the event of a breakup.
Another common reason for a couple to get a postnuptial agreement is to ensure that they are able to divide their assets fairly. This can be done by establishing separate property, identifying pre-marriage debt, or specifying the inheritance of children.
You can also include provisions that would allow you to continue to have the business you started with your spouse if the marriage ends. These can cover things like business ownership, a profit-sharing system, and other important details that may not be included in a prenuptial agreement.
These agreements can be quite complex, so it is important to have legal counsel to ensure that the paperwork is filed correctly and that you and your spouse’s financial records are accurately vetted. This can make all the difference in whether or not a court will enforce your postnuptial agreement.
If you are considering getting a postnuptial agreement for your business, it is a good idea to consult with an experienced Indianapolis family law attorney who can advise you on the best way to go about it. They can also help you to understand the pros and cons of a postnuptial agreement and whether it is right for you.
If you are thinking about getting a postnuptial agreement for the assets in your business, it is a good idea that you talk with an experienced Indianapolis family law attorney before you begin the process. These attorneys can guide you through the entire process and ensure that your agreement is fair to you and your spouse.
Talk to an Attorney
Every state has its own unique set of laws when it comes to getting a divorce. But one common thing that all divorcing couples have to deal with is how to divide their property. Regardless of whether or not the couple can agree on this issue on their own, they will need to go to court in order for a judge to decide what should happen with their marital assets and debts.
If you own a business, protecting it in a divorce is especially important. A privately-held business may be one of your biggest assets, and it is likely to provide an income stream for your family and other co-owners. If your business is awarded to your spouse in a divorce, you could be left without that stream of income permanently.
The best way to protect your business in a divorce is to consult an attorney with experience litigating these kinds of cases. The attorney can help you get a good valuation, draft and defend a prenuptial or postnuptial agreement, or fight for your claim to your business.
You should also consider getting copies of all of your and your spouse’s financial documents (bank statements, W2s, paystubs, retirement account statements, etc.). This is a good idea before you start considering filing for a divorce.
This will also allow you to be prepared to answer your spouse’s questions about your business’s financial situation. This will help to create a solid foundation for communication after the divorce.
A great way to begin is by scheduling a consultation with an Indiana divorce attorney. These meetings are free and can be helpful in figuring out how to protect your business in your divorce.
The attorney might review your financial statements and other documents during the consultation and explain what should happen next. The lawyer might also ask you about your plans for the future, such as if you want to file for a second divorce or need to respond to a lawsuit filed against your business.
If you’re concerned about how to protect your business in an Indiana divorce, contact Hains Law, LLC today for a free and confidential consultation. Our attorneys have helped clients throughout Indiana get fair settlements on their divorce issues and can help you too.