Divorce for Business Owners in Denver

Helping Business Professionals Protect Their Assets in CO

It’s no secret that going through a divorce can be complex and stressful. The high stakes involved in issues such as property division and child custody are understandably concerning for many couples who decide to end a marriage. If you’re a business owner, it may feel like the stakes are even higher.

Like other assets, your business will also be divided in divorce proceedings—regardless of whether or not your spouse was involved with the business prior to marriage. Unfortunately, the process of dividing business interests is rarely straightforward, as they are often difficult to value. This is one of many reasons why it’s crucial to seek the help of a skilled divorce attorney who will be your legal resource, guide your next steps, and fight tirelessly on your behalf to protect what is rightfully yours.

Filing for divorce in Denver? Don’t risk losing what’s yours. Call (303) 225-3343 to request a free consultation today.

How Are Businesses Divided in a Colorado Divorce?

There are various factors that impact how a business will be divided in a divorce. One of the first steps to understanding the legal process is having a general knowledge of state laws and regulations.

As an equitable distribution state, Colorado divides marital property equitably (not to be confused with equally). While the court always strives to achieve fairness during asset distribution, equitable distribution does not always translate to mathematical precision. It isn’t unheard of for couples to receive a roughly 50/50 split of property in a divorce; however, it’s never a guarantee.

Keep in mind that while the Colorado court can't allocate a business to a non-owner during a divorce, the court can value the business and include it with the rest of the assets to be split—assuming the business is marital property, which is often the case. Even if you started the business prior to marriage, your spouse may still have a claim to business interests accumulated during your marriage.

What Factors Affect How a Business Is Divided?

As you know, divorce is never one-size-fits-all. Other factors can affect your unique circumstances. The Colorado court will likely consider a range of factors when allocating your business, such as:

• When the business was founded. If you started the business before marriage, how long did you manage it without your spouse? How much did you earn in that time? This is critical to determining the value of your business.
• If the business’s value increased during the marriage. If the overall value of your business increased during your marriage, the court will need to determine its marital equity.
• How much the business is worth. This is a straightforward way to determine its equitable division during the divorce proceedings.
• How the business is incorporated. The court will consider whether you are a sole proprietor or formed an LLC when starting your business. If you and your spouse started a business without formal documentation, this may be considered a general partnership and could result in your spouse receiving a portion of the business.
• If there are other partners involved in the business. The involvement of additional co-owners or partners can affect asset division in a divorce.
• If you have a business succession plan in place. Any legally binding documents will be considered during the division of a business in a Colorado divorce.

More often than not, the Colorado court will consider 3 key things to determine the value of your business:

1. Cost (the market value of the assets)
2. Market (how the business compares with similar organizations)
3. Income (cash flow to the prospective buyer)

Options for Denver Business Owners During Divorce

During a divorce, it’s imperative for business owners to make the right decision for their reputation, income, and livelihood. To determine the best path forward, it’s always wise to stay educated, prepare yourself by seeking reliable legal counsel, and consider all the options available to you.

Consider these common options for business owners undergoing a divorce:

• Propose a buyout. In this instance, one spouse buys out the other.
• Make a sale. Sell the business altogether.
• Opt for co-ownership. Couples on amicable terms may consider joint ownership going forward.
• Offset the value with other marital assets. For example, one spouse may propose to keep the business while the other partner keeps the home.