When a marriage includes a family business, a divorce becomes more than a personal issue. If your spouse is also your business partner, you may need a careful plan that protects your interests and the company you built together. Understanding how Indiana law handles businesses in divorce can help keep the enterprise running as you move into the next stage of life.
How Indiana handles asset distribution
Indiana uses a one-pot rule for marital property where all assets are part of the marital estate, even if they were owned before marriage, inherited or bought together. The law also assumes an equal division of the estate between parties. However, either spouse can challenge this assumption by providing relevant evidence that shows why a 50/50 split would not be fair and reasonable.
Determining the true worth of a business
Family businesses often have complex structures that make a simple appraisal inadequate for accurate valuation. A forensic accountant would normally use one or a combination of the following methods to find the true worth of the company:
- Asset basis: Calculating net value of tangible and intangible assets
- Market basis: Comparing the business to similar companies sold recently
- Income basis: Focusing on future earnings and cash flow (often the most critical for high-earning firms)
Getting a proper valuation of the business is also vital for determining your future plans for the company when you and your spouse are working out a settlement.
Protecting operational stability and continuity
To minimize disruption during a divorce involving a business, it is vital to protect your daily operations and relationships with clients and employees. One common settlement strategy is a buyout, where one spouse keeps the business by giving up other marital assets in exchange for the company.
Structured payments are another option, which lets the settlement be paid over time to preserve cash flow. In rare cases, former spouses may also continue co-owning the business if they can maintain a workable relationship and have a clear post-divorce operating agreement.
Strategic stewardship of your future
Ending your marriage with your spouse and business partner can be emotionally difficult, especially when you both put years of hard work into building a company. An experienced lawyer can work with you to find the best way to safeguard both your personal and professional future after the divorce.
