FAMILY LAW ARTICLES
In a dissolution proceeding, it’s imperative to understand what characterizes a business and how to value it. The first thing to do is be clear as to whether you have a job or a hobby. That way, you can focus on how they can be valued. They aren’t going to be seen the same way, especially regarding how they’re considered for financial issues. That could include which spouse has to pay for spousal support, alimony, or child support. Here’s what you should be thinking.
Don’t Let Principles Cost You Money
You may want to be clear about your hobby or business and how it’s important to you. But if you spend a lot of time disagreeing with your spouse over this characterization and the small amount of value that comes with it, you may end up costing yourself a lot of money in attorney’s fees. It’s not necessary and could be counterproductive to what you’re trying to do. Your hobby can be substantial, even if it’s not characterized as a business in your divorce proceedings.
Spending the money to value a business is only necessary during a divorce. If determined your company has a high value, that’s going to affect the proceedings. Then you’ll want to be more direct about categorizing your business. Otherwise, it’s often best to just let the characterization fall wherever it does and not get caught up in the semantics of everything. Your wallet will thank you, and it may also be that the divorce proceeding can move along faster because there is less conflict or disagreement, as well.
Is the Business Yours, or “Ours”?
Community property laws are going to matter where a business is concerned in a divorce proceeding. If it was your business before marriage, it’s probably yours. However, that can change over time. If you and your spouse invested money in the company, the courts might see it as belonging to both of you.
That can change how it’s valued and characterized. It can also affect how it’s handled when property and financial obligations are being divided. Talking to both parties, evaluating financial records, and considering how the business has operated during the marriage will all be used to characterize the company in many cases. It’s also important to consider what the other spouse is doing, as one spouse builds up a business. The efforts of a spouse may contribute to business growth, even indirectly.
The best way to make sure a business is being characterized correctly during a divorce proceeding is to work with trained legal professionals. Reach out to us at Hartley Lamas et al. today, and let us help you ensure your divorce’s financial and business issues are handled the right way for everyone involved.