When a business-owning Rhode Island couple decides to get divorced, one of the biggest concerns they face is what will happen to their company. Often, these businesses are the main sources of income for the family, and it takes a lot of sacrifice and time to make one a success. Thus, it’s only fitting to get your well-deserved share.
What’s likely to happen during the split?
In Rhode Island, there are three scenarios that may occur during the division of a business:
- The court might award the business to the spouse most involved with running it and give the other spouse sufficient compensation, which can be other marital assets of equal value to their share of the business.
- The court can ask you to sell the business and then divide the proceeds equitably.
- The court may ask you to continue operating the business jointly as partners.
What does the court consider when dividing a business?
Rhode Island divorce courts split marital assets equitably or, rather, fairly. For this to happen, the court will consider the unique variable in your marriage, for instance:
- When was the business started: Was it started during the marriage or before? If it was started before the marriage, then the court could only split the appreciation it had from the date of your marriage to your divorce, that is, if you actively worked on it.
- The role each spouse played in the business: Did one spouse do most of the work while the other was a silent partner? Did both spouses play an equal role? The court will look at job titles, duties, and compensation to determine who contributed what to the business.
- Contributions as a homemaker: Maybe you stayed at home to take care of the kids and household while your partner worked on the business. In this case, you will have a claim to the business for making it possible for your spouse to concentrate on building it.
It’s essential to get an accurate valuation of your business before splitting it. Your appraiser should look at the business’s earning power, goodwill, financial stability, and future prospects. You can only get a fair share if you have this knowledge and use it in court.