Protecting Your Business During a Divorce in Idaho
Idaho is a state of proud entrepreneurs, home to 183,972 small businesses. It’s also a place where people marry — and divorce — at higher rates than the rest of the country. Divorce is stressful for anyone, but business owners could face a set of additional concerns and unique challenges.
If you are an Idaho business owner who has decided to call time on your marriage, it is vital to seek qualified divorce advice to help protect your business interests.
In this post, we will explore the difference between marital and business assets and examine various options open to a divorcing couple that are in the best interests of both the business and each spouse.
Ways to Protect Your Business in an Idaho Divorce
Idaho is a community property state. This means that property acquired during marriage — including businesses — is said to be owned by the “community” of the marriage. It is also important to note that a couple’s debts are also community property in Idaho.
Community property laws mean that, in a divorce, a business considered community property will be divided equally between both spouses. However, there are exceptions built into community property laws that may help you protect your business assets.
Written agreements
Under Idaho state law Title 32, Chapter 9, 32-906, spouses may create a written agreement stating that “all or specifically designated property and the income, including the rents, issues and profits, from all or the specifically designated property shall be the separate property of one of the spouses.”
Simply put, during the marriage, you can formally agree to separate your business assets and profits. This could help to protect your business when you divorce.
Prenuptial agreements
Some couples take other proactive steps, such as signing prenuptial agreements. In Idaho, these are called premarital agreements and are enforceable during divorce proceedings. They can simplify the divorce process by detailing how a business will be valued and divided should you decide to go your separate ways.
When businesses are separate property
There are a few situations in which a business could be considered separate property rather than the communal property of the divorcing couple. This could be another way to protect business assets.
These scenarios include:
- Inheritance: Generally, inheritance received by one spouse is considered separate property.
- Gifts: Gifts from one spouse to the other become the property of the spouse who receives them.
- Owned before marriage: If one spouse owned the business before marriage, it may be considered separate property. However, if both contributed funds or time to its running, it may be considered community property.
What constitutes community and separate property in a marriage can be confusing. An experienced divorce attorney can thoroughly review your assets and business interests and advise you on where you stand under Idaho law.
Your attorney can also help you navigate the following processes for dividing a jointly owned business while fighting for your best interests.
Navigating the Division of a Family Business
It is crucial to protect your business as it may impact the financial situation of both spouses and your children after your divorce. There are several legal options you can discuss as part of your divorce proceedings that can help protect your business and protect your finances.
Value the business
In order to divide your business fairly, you need to understand what it’s worth. There are several possible approaches, including the income approach, asset approach, and market approach.
The valuation process takes into account:
- Fixed assets
- Accounts receivable
- Debts
- Liabilities
- Earning capacity
- Goodwill
- Reputation
- Intellectual property
Your divorce attorney may recommend enlisting the help of a business valuation expert. He or she can accurately assess how much the business is worth, making it easier to divide your business fairly.
Consider the future of the business
Ensuring the stability of your business moving forward is generally in the best interests of all parties. For example, if children are involved, the income generated by the business may influence child support payments.
When a business is considered jointly owned property, there are generally three options available to divorcing couples in such situations:
- Buy-out solutions: One spouse may offer to buy out the former spouse’s share. However, if both spouses have their assets tied up in the business, it is not uncommon for neither spouse to have the cash to make this a viable option. You may consider borrowing to fund a buyout or bringing a new partner into the business.
- Selling the business: The business could be sold and the proceeds divided between the two spouses.
- Co-ownership arrangements: The divorcing couple may decide to continue running the business together. However, as divorce proceedings can be emotionally charged, it is important to ensure everyone is on the same page by drafting a detailed written agreement about how the business will be run moving forward.
The Role of an Idaho Divorce Attorney
It would be unwise to try to navigate divorce proceedings without legal representation when a family business is involved. A qualified and experienced Idaho divorce attorney can help protect your business assets in the following ways.
Legal knowledge
Navigating property division under Idaho law can be complex, especially when trying to determine whether a business is community property or separate property. An Idaho divorce attorney can review your financial situation and provide tailored advice that lets you know where you stand.
Negotiation
When emotions run high, you need a third party to represent you and fight for your best interests. Divorce attorneys are skilled at helping divorcing couples reach agreements that work for them and their children as amicably as possible.
Representation
If it is not possible to come to an agreement with your former spouse outside of court, your divorce lawyer can fight for your interests in the courtroom. This involves presenting a clear case to the judge that may result in a fair division of business assets, allowing you to move forward with your business and your life.
Take Proactive Steps to Protect Your Business
At Brown Family Law, we understand that divorce is complex, challenging, and emotionally draining. When your business interests and future livelihood also hang in the balance, it can be easy to feel overwhelmed. Our caring yet tenacious divorce attorneys have seen all these challenges before and can help you navigate divorce proceedings successfully.
Brown Family Law’s divorce attorneys aim to protect your entire family’s best interests. We know your business is part of your legacy and something you may want to pass on to your children one day. So be proactive and hire our experienced attorneys to protect your marital assets, personal interests, and business.
Your journey to peace of mind starts with a conversation with a qualified Idaho divorce attorney. Call Brown Family Law at 208-987-7005 or contact us online to take the first step today.
