Divorcing couples in Rhode Island often face complex challenges, especially when it comes to dividing a family business. Rhode Island is an equitable distribution state, meaning that marital assets, including businesses, are divided fairly, though not necessarily equally.
The fate of a family business depends on several factors. Here you can learn more about Rhode Island property division laws and how they will impact the division of your family business.
Is the business a marital asset?
The first step in determining the division of a family business in a Rhode Island divorce is identifying whether it is a marital or separate asset. A business acquired during the marriage is typically considered marital property, subject to division.
However, if one spouse owned the business before the marriage or received it through inheritance, it might be classified as separate property. Nevertheless, if the non-owner spouse contributed to the business, the court may still consider it a marital asset.
Valuing the business
Once it is determined that the business is a marital asset, the next step is its valuation. The court may require a professional appraiser to assess the business’s worth. The valuation considers factors such as the business’s income, assets and potential for growth. This step is critical in ensuring a fair division of assets.
Options for dividing the business
Rhode Island courts aim to protect the business while ensuring fair distribution. There are typically three options:
- One Spouse Buys Out the Other: The spouse who wishes to retain the business can buy out the other’s share.
- Selling the Business: In some cases, the business may be sold, and the proceeds divided.
- Co-Ownership: Though rare, some couples agree to remain co-owners post-divorce.
The division of a family business in a Rhode Island divorce involves careful evaluation of its status as a marital asset, its valuation and options for equitable distribution. Each case is unique, and legal advice is often necessary.
