Business Ownership and Divorce
Knowledgeable Milwaukee Divorce Attorneys Effectively Guide Divorcing Business Owners Through Complex Matters
Unique strategies tailored to protect you and your business
Divorce not only impacts the spouses seeking divorce and their families, but also the assets owned by those families. When divorcing couples possess business ownership interests, a dispute over the value or the division of those interests can alter the economic stability of the business, possibly causing partners, clients, and employees of the company to become casualties of the divorce as well.
If you or your spouse have significant business ownership interests in Wisconsin and are seeking to end your marriage, you are encouraged to seek an experienced Milwaukee divorce attorney with the knowledge and skill to understand how that business may be affected by any division of ownership. At the law offices of MacGillis Wiemer LLC, our Milwaukee divorce attorneys listen to your concerns and wishes regarding your business interests and guide you to an effective resolution. Trust us to protect your best interests, your business and your financial future.
In a Wisconsin divorce, are business ownership interests divided differently than other types of property?
No. In Wisconsin, absent showing a particular asset is owned individually, it is presumed to be marital property. Therefore, a spouse seeking to show their business interest is their individual property must provide evidence that the business interest was obtained prior to the marriage, or was specifically given to only them via inheritance or a gift. Even then, a showing that the business ownership provided a benefit to the marriage can be used to re-establish it as marital property.
As a community property state, Wisconsin statute recognizes that each spouse is entitled to half of the marital property upon divorce. If a couple is unable to reach an independent settlement agreement through mediation or other outside negotiation, including prenuptial agreements, a family court can determine both the total value of those assets, including a determination of the fair market value of the business, and order how those assets are to be distributed.
If a division of ownership interest between two divorcing spouses could negatively impact the business, the court may order that one spouse receive the full ownership interest, and that the other spouse receive assets of equal value to the fair market value of the business ownership interest—raising additional issues if the business interest represents more than half of the couple’s total assets
Because of this, the fair market value of a privately owned business is often one of the most contested issues in a divorce, as that value is innately fluid and even upon determination, can still be subject to additional considerations. For example, the value of a minority interest in a closely-held businesses can be “discounted”, based upon the limited power of that minority interest or upon the lack of marketability for such an interest.
In addition, while many states find that businesses such as a private medical practice are not divisible, as the primary asset of the business is that spouse’s medical skills, reputation and services, and thus cannot be sold, Wisconsin case law is far less clear. Because of this, a determination of fair market value based on the spouse’s income raises issues when that spouse is also ordered to pay maintenance based on that income, creating the possibility of double counting when that income has already been counted as a marital asset.
What special issues are unique to business ownership interests during a divorce?
There are many variables which can affect a determination of the fair market value of a business. The deferring of compensation and expenses, for example, can be used to create a rosy current balance sheet at the expense of a future balance sheet.
Because of such accounting variables, attorneys for both spouses in a divorce seek as much internal documentation of the day-to-day finances of a company as possible. Through the discovery process, both sides are entitled to inspect records indicating factors such as:
- Tax returns
- Payroll records indicating how much employees are paid
- Loan applications, both successful and unsuccessful
- Sales and revenue figures reflecting not only revenues and profits, but the marketability of the business itself
- Client and customer information
- Company assets, such as real property or patents
Given the sensitive nature of such information, one of the key concerns arising from a divorce action is that of confidentiality. Because of the likelihood that disclosure of this information to the public or to competitors could adversely affect the business, it is important that both parties enter into a confidentiality agreement to protect the business.
Our Milwaukee divorce lawyers protect your business, your family, and your future
At the offices of MacGillis Wiemer LLC, our dedicated Wisconsin divorce attorneys have more than twenty years of combined experience aggressively representing divorcing spouses and tenaciously protecting their business interests. We have exclusive access to sophisticated accounting and financial expert resources who investigate and analyze even the most complicated company ledger. We have a proven track record of finding solutions beneficial for you and your company. Contact us online or call us today at (414) 727-5150 to learn more.