In Alabama, when couples divorce, they go through several steps. One important step is dividing their property. This includes looking at everything each person owns, even businesses. Businesses started before the marriage usually aren’t split up in a divorce. But if a business began during the marriage, it might be subject to division.
Many couples wonder if they both get a share of the business. This part of divorce is complex, and couples should understand the many considerations involved in the process.
Alabama is an equitable distribution state
Alabama follows “equitable distribution” rules. This means the division should be fair (not necessarily equal). A non-working spouse doesn’t automatically get half of a business in a divorce. For professional practices, here’s what could happen:
- The court decides if the business is marital property. If it started during the marriage, it usually is.
- They determine the business’s worth, including tangible assets (like equipment) and intangible assets (like the business’s reputation).
- The court considers many factors to decide what’s fair. These include how much each spouse helped the business, the length of the marriage and both spouses’ financial situations. Child custody arrangements might also come into play.
- The spouse who didn’t run the business might get some of its value, but not necessarily ownership or control.
- Often, the spouse who runs the business keeps it. The other spouse receives assets of similar value.
The division of business value doesn’t necessarily mean shutting down the business. The spouse who doesn’t keep the business might get paid in other ways:
- Monetary payments: Either all at once or over time
- Other assets: Like the family house or retirement savings
- Financial arrangements: Like getting some of the business’s future profits
To achieve a fair settlement, these forms of compensation can be used individually or in combination.
Fair solutions for business and life
The goal is to find a solution that’s fair to both spouses. That may look like one spouse keeping the business while the other receives equivalent assets or compensation. Ultimately, the final decision shouldn’t hurt the business or leave either spouse at a disadvantage. If disagreements arise over business valuation or division, a legal professional can help individuals work toward a fair divorce settlement.
