Do I Have to Sell My Business Interests When I Divorce?

Sign that says Business for sale

High-asset divorces involve issues that require a mastery of the law and attention to the finest details. This is because high-value property can be complex to properly appraise and the financial stakes are through the roof. Business interests, such as family-owned businesses or private ownership stakes constitute one of the most contentious property-related issues in high-asset divorces.

Beyond the value of these interests is the blood and sweat equity that people have invested in conjunction with the legacy and continuity of the businesses. For clients who have business interests at play in their divorce are therefore highly interested in whether they have to sell those interests when they divorce.

Is There a Premarital Agreement?

The very first question that may settle these issues is whether there is a prenuptial (or premarital) agreement. This is a legally enforceable contract that can preemptively protect business interests and bypass community property laws, thereby allowing couples to protect their current and future business interests should the marriage end. If an agreement exists, your attorney can help you determine how the terms of that agreement implicate your business interests.

Nevada is a Community Property State

Absent a premarital agreement, all assets acquired during marriage are generally treated as community property. Simply put, each spouse has an equal right to any property and income earned between their date of marriage and their separation. This means that any business that begins or business stakes that are obtained during a marriage are considered marital property and subject to division.

For business interests that pre-existed the date of marriage, those interests are generally classified as separate property and remain with that spouse. We must stress, however, that there is nothing simple when it comes to these assets because there is a very real possibility that marital property was used to invest, improve, or fund the business. It is also common to see the other spouse significantly contribute to the growth or success of the business during the marriage. In these cases, it is necessary to bring in experts to help sort out whether the community acquired an interest in the business and what the value of that interest may be.

Dividing Property by Agreement

The fact that spouses have an equal interest in the marital property does not mean that ownership of each piece of property is split in half. Instead, the spouses attempt to reach an agreement, or a court considers the total value of all marital property and attempts to distribute property so that each spouse walks away with an equal share. Therefore, a spouse can use other assets—like real estate or other investment property—to offset the value of the business interests and avoid having to sell them as a result of the divorce. The parties may also agree to payment terms where one party buys the other’s interest in the business.

Contact Viloria, Oliphant, Oster & Aman L.L.P.

Viloria, Oliphant, Oster & Aman, L.L.P. is a top-tier law firm that has successfully assisted clients in navigating high asset divorces. We partner with experts to properly classify and appraise complex assets and property so that we can protect our clients’ significant financial interests. We take our duties seriously and put forward the resources necessary to pursue our clients’ best outcomes. Call Viloria, Oliphant, Oster & Aman L.L.P. today at (775) 227-2280 to schedule an appointment or contact our office¬†through our website. We represent a variety of different family law cases.

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