How Is a Family Business Divided in a Tennessee Divorce?

The fair distribution of marital property is one of the most challenging aspects of divorce, and few things complicate the matter more than business ownership. If you and your spouse own a family business and are facing a divorce, there is a lot on the line, which means you need skilled legal counsel on your side from the start. Our experienced Murfreesboro, TN, property division attorney at the Law Office of David L. Scott welcomes the opportunity to help.

Your Murfreesboro Divorce Case

You’ll file your Murfreesboro divorce case at the Chancery Court Clerk’s Office. And because your case involves complex property division, it will likely be heard by the Rutherford County Chancery Court in Murfreesboro.

Equitable Distribution

In Tennessee, marital property must be divided equitably, meaning fairly under the unique circumstances at hand. If you and your spouse started a business together during your marriage, it’s a family business that comes with its own brand of complications.

In addition to the financial impact, there can be a real sense of ownership and emotion involved in running a business. And this can make the matter of property division far more difficult.

If You’re Both Invested in Keeping the Business

If you and your divorcing spouse are both invested in keeping the business post-divorce, the court will address the matter in terms of factors like the following:

• Which spouse had more involvement in running the business or brought a specialized skill to its daily operations
• Each spouse’s earning capacity and current marketability, which can be a complicated issue if both your incomes are generated by the family business
• Each spouse’s financial requirements, for example, the primary custodial parent is likely to have greater financial needs than the parent with the visitation schedule

If neither of you is a stronger candidate than the other, the court will have a difficult decision to make, and you’re well advised to be well represented by a trusted property division lawyer.

The Available Options

While it’s not common, TN courts can assign continued joint ownership of a business. This is reserved for those instances when the divorcing spouses negotiate a strong operating agreement and are committed to maintaining a professional business relationship.

It’s far more common for one spouse to be awarded the business and for them to buy out the other’s ownership. This comes with the additional complication of establishing a mutually acceptable value.

If neither spouse can afford to buy out the other’s interest in the business, or neither can obtain the financing necessary to do so, the court may order that it be sold. The vagaries of the market generally make selling a business as a direct result of divorce less than ideal. 

Our Experienced Murfreesboro, TN, Property Division Lawyer Can Help

David Scott is our trusted Murfreesboro, TN, property division attorney at the Law Office of David L. Scott, and he has a wealth of experience successfully defending our valued clients’ rights in relation to business ownership in divorce. Learn more by contacting us online or giving our firm a call at 615-896-7656 today.