skip to Main Content

Business valuations and divorce in Maryland: Who gets what?

On behalf of Shelly McKeon

Dividing marital property can be an intimidating process. Having a basic understanding of how the more complex assets, like business interests, are handled can help.

Getting divorced is a process that does more than just end a personal relationship; it also ends a financial partnership. This process requires the couple take stock of and account for every asset and liability that was accumulated during the course of the marriage. This is then accounted for during the property division determination portion of the divorce proceeding.

The assets included in this proceeding can include everything from the cash hidden under a mattress to retirement assets in various accounts, a large family home to a timeshare used during vacations. Everything with value is likely subject to division. This fact can give some business owners pause. After all, the business itself is something of value and is likely divisible during divorce.

When is a spouse entitled to a portion of the business valuation?

Maryland state law requires that marital property be subject to allocation during divorce. Marital property is a legal term, essentially defined to include all property gained during the marriage. This property is split in a manner the court deems fair. Fair does not always translate into an equal, 50/50 split. Instead, the court will take various considerations into account when putting together a split.

In most cases, any business interest acquired during the marriage is considered marital property. As such, the business interest is subject to division during divorce. Thus the business is given a valuation in order to determine how the interest in the business is split. If applicable, each spouse is then entitled to a portion of this value.

How does the court split the business?

Courts generally do not cut a business in half in order to provide a fair split. Instead, a value is given to the business and taken into consideration when all the marital property is split. This could result in one spouse getting the business while the other gets another piece of property of comparable value, such as a family home.

How is the business’ value determined?

In Maryland, the court will use the fair market value for consideration during the split. In many cases it is wise to hire a forensic accountant to aid in determining a proper valuation. This generally involves a review of what a willing buyer would pay to a willing seller for the interest in the business.

In addition to professional financial experts, it is also wise to seek the counsel of legal experts. Your attorney can help to better ensure that your interests are protected, advocate for your rights and fight for a truly equitable division of property.

Share on:
Back To Top