Marriage and business both require sweat, blood and tears. But when the business outlasts the marriage, things can quickly become contentious.
Whether the business is a marital property acquired during the marriage or a separate property obtained before the marital relationship, both parties’ extent of involvement is often unequal. One party may have significantly brought in more to advance the business than the other.
However, a more involved spouse does not necessarily mean the other did not do anything to add value to the business. Sometimes, a spouse’s indirect contributions entitle them to assert their share in the company.
Examples of indirect contributions
Alabama courts divide a divorcing couple’s assets equitably, which is not necessarily a 50/50 split. The judge can exercise broad discretion and assess relevant factors, such as each party’s earning capacity, to give a fair decision.
Thus, in the spirit of fairness, the courts may consider a spouse’s indirect contributions that can either be financial or nonfinancial:
- Utility bills and taxes
- A job position in the business
- Renovation or property upkeep fees
- Household maintenance, such as cooking, cleaning and caring for the child
The state’s law recognizes that if a spouse devotes time, money and energy to these efforts, the other party can focus on the business. Thus, the contributing spouse can fight for a percentage of the business equivalent to how much they participated in its growth.
Examples of settlement scenarios
If both parties cannot agree, the court usually intervenes for a fair settlement. However, spouses may want to negotiate out of court to save time, resources and emotional sanity. For example, suppose the spouse earning substantially more wants to acquire sole ownership. In that case, the contributing spouse must concur to receive another asset in exchange for their stake in the company.
Further, if neither party wants to budge, they may find a middle ground in selling the business and splitting the profits equally. But these scenarios can become too technical without sound advice. A valuation professional and legal team can help protect a party’s interests, the business and the entire family’s well-being.