Maryland Divorces Involving A Business
In a divorce, a business classified as marital property is subject to equitable distribution. A Maryland court will divide it fairly based on several factors, which means that it is not always an equal split.
A business started or substantially grown during the marriage is marital property, even when the other spouse’s name appears on no documents. Indirect contributions count as well. For example, a spouse who managed the household while the other ran the company has an established basis for a marital interest in that business.
If you are a business owner, this can bring a specific set of concerns. Will the business remain solvent? Can your ex-spouse hold a legal claim to its value? What options exist for your company going forward? Our attorneys at Trevillian Law represent clients in Anne Arundel County and across the Baltimore metro area who face exactly this situation.
Options For A Business After A Divorce
The options you have depend on how courts classify the business, its value and the negotiations you make before a judge makes those decisions for you. Understanding how Maryland’s asset and property division rules apply to your company is a necessary first step.
Valuing A Business For Divorce
Establishing the business’ dollar value is critical in a divorce. The method used to calculate that value directly shapes what each spouse can realistically claim:
- Market valuation: This method calculates what the business would sell for at the time of the divorce. Market valuation can be particularly relevant for businesses with transferable assets or an established sale market.
- Income-based valuation: This method projects net income over time and recalculates it to present-day value. It is commonly used for businesses whose primary asset is their earning power.
- Asset-based valuation: This method subtracts total liabilities from total assets to arrive at the book value. It is the ideal valuation method for businesses that hold significant physical or financial assets.
The valuation figure does not only determine what a spouse receives from the business. Courts also use it when calculating alimony, so an inaccurate number can affect your financial position well beyond the business itself.
How The Business Can Be Handled
Once the business has an established value, there are three main paths forward:
- One spouse buys out the other’s interest and retains full ownership, keeping the business operational
- Both spouses continue as co-owners under a formal operating agreement
- The parties sell the business and divide the proceeds equitably
These outcomes can be reached through a negotiated settlement or, in contested cases, resolved by a court-ordered financial buyout.
If your divorce is not yet final, certain agreements can also protect your business. A postnuptial agreement can define how ownership is treated going forward. A shareholder or buy-sell agreement can require that any transfer of ownership receive approval before it takes effect. Both can make it harder for your share of the business to change hands without approval during the divorce.
Our attorneys can help you determine which path forward serves your interests and what protections are still available to you.
Talk To An Experienced Divorce Lawyer Today
When a business is at stake in a divorce, the right legal representation can mean the difference between keeping your company intact and losing control of it. Trevillian Law has served Severn and the surrounding communities since 1993, and our lawyers carry over 85 years of combined experience handling property division in Maryland divorces.
Our legal team can help you understand your options early, putting you in a strong position to protect what you have built. Call us at 410-609-9987 today or send us an email to schedule your free consultation.