What Happens to Your Business If You Get Divorced

What Happens to Your Business If You Get Divorced

Divorce can be pretty difficult to navigate under the best situations. Things become even more complicated when if you own a business. Considering how difficult everything can be, it’s in your best interest to be informed about this. To help you out, we thought it would be useful to put together a brief article discussing important things that you’ll want to consider if you are getting divorced. If this is something that you’re interested in learning more about, read on to know more about what happens to your business if you get divorced.

Will Your Spouse Be Entitled to Half Your Business?

Contrary to popular belief, your ex-spouse is not entitled to half of your business. Divorce or separation does not automatically mean the other party is entitled to half of the business’s value. Instead, the business is included in the parties’ property pool. All of the factors outlined in family law concerning the value of the business are considered after it has been valued.

How Is a Business Valued In a Separation or Divorce?

When dividing marital assets during divorce or separation, business interests are valued according to their economic benefit. When valuing a business interest, the court does not consider the value of the whole business beyond the owner’s share of it. Additionally, future resources, such as salaries and other benefits, are considered when determining equitable distribution.

Valuation methods vary by business and depend on the specific circumstances of a business. Accordingly, the method to value each business will vary depending on whether the business is operating, whether earnings are stable, and whether there is any goodwill to consider.

How Will Your Business Assets Be Divided?

Despite how straightforward this question may seem, there are a slew of different things to consider when it comes to how business assets will be divided.

In most cases, a sole trader like a tradesperson or professional consultant is a “personal exertion” style of business, meaning that it is conducted by one person and has little to no employees. Business values can still be determined, however. Typically the business is kept by the person who has the skill and training needed to run it. When determining the value of a business, most appraisers rely on a number of factors related to the person who owns it. These factors include personal reputation and evidence of past earnings. The majority of the time, appraisers will apply a value to such a business as one based on its ability to earn money based on its past performance.

If the two partners are in business together, they can continue to operate the business. In most cases, they will continue running the company. Alternatively, one partner can also opt to buy out the other partner. The value of a company will determine how much cash the partners get from selling it to someone else.

If a business is structured as a company, what happens to it when it’s sold depends on whether or not there are shareholders. If the company is privately held, then the business will be treated much like partners. If the business has third party shareholders, then its value needs to be determined so that it can be divided up as part of the divorce settlement. Whatever happens to the shares and the company depends on the company and its structure.


We hope this article proves to be useful when it comes to furthering your understanding of how divorce affects your business. Be sure to keep all of this information in mind so that you can best navigate divorce in a way that is fair to all parties involved. Feel free to look back on this article if you need a quick refresher on this subject.
If you need family lawyers in Redland Bay to review your case, kindly reach us at (07) 3206 8700 or info@bimalaw.com.au. Bickell and Mackenzie provide legal solutions to Redland Bay and surrounding areas. Talk to us today!

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