New Orleans Divorce Lawyers Helping Business Owners
Skilled representation in New Orleans for business owners seeking a divorce
Spouses make numerous sacrifices to get a business started and to help it grow. In addition to financial investments, getting a restaurant business, a software company, a retail store, or any type of Louisiana business off the ground requires long hours away from home. Some spouses own the business themselves. Many spouses have partners. Some spouses may be corporate owners.
Most spouses want to save their business after the divorce so that they will have an income and will be able to do the work that they enjoy. At the Law Office of James A. Graham, our divorce lawyers in New Orleans are skilled at examining what type of business spouses have, the value of the business, how the business generates income, how you can protect your business if you’re an owner, and the rights of the other spouse. Call us today to get started.
How can we help?
How does a divorce affect a business in New Orleans?
A business is considered marital property in Louisiana. Our community property laws provide that your spouse will have an equal interest in your business no matter how your business interest is titled – unless certain exceptions apply.
Some of the exceptions that may protect your business from a claim by your spouse are the following:
- A prenuptial agreement. You entered into a prenuptial agreement where your spouse waived her/his financial interest in the business in the event of a divorce. A spouse who owns or has a partial interest in a business before the marriage is likely to consider a prenup to protect their interest in the business. Generally, a postnup is considered if a spouse develops the business after the marriage.
- Separate property. The business is considered separate property. If you own a business before the marriage, your business “might” be considered separate property that you can keep after the divorce. Normally, this is a tough condition to meet. Any increase in the value of the business, any investment of time or money by your spouse, and any time spent taking care of the children so you can work at the business are all likely to transform your business into marital property (at least the increase in value of the business will be considered marital property).
- Other owners. There is a partnership agreement or other business agreement that provides that the partners will acquire the business in the event of a divorce.
How is the value of the business determined?
A key consideration when spouses divorce is determining the value of the business. The value of your business affects your ability to keep the business, whether your spouse will consider a buyout of her/his interest, whether the business should continue or be sold, tax issues, and other considerations.
Normally, our New Orleans divorce lawyers work with business appraisers who are skilled at placing a value on all types of businesses. There are different ways to value a business so it’s important to work with a skilled business appraiser and our skilled divorce business lawyers. The value of a business may be based on:
- The value of the assets minus the liabilities of the business
- How much comparable businesses have sold for in the same region
- The ability of the business to generate profits over time
- Any preset ways of determining value such as when a partnership agreement states how value should be determined if a partner sells, retires, or divorces
- The current rate of any stock in the business
Many divorce disputes involving a business result in a battle between the experts, The appraiser for the spouse who owns the business uses as low a value as possible while the spouse who just wants her/his share of the business uses as high a value as possible. Ultimately, the value may be determined by a Judge. Often, when divorce mediation is used, the value is negotiated while all the other property is divided too.
What are the options for keeping and selling a business when spouses divorce?
When spouses divorce, all their marital property is divided. In addition to the business, some of the largest assets include the marital home, bank account, investments, retirement accounts, cars, and other assets that may have significant value, such as jewelry.
Generally, if you own a business and want to keep the business, you will have to buy out your spouse’s interest in your business.
- A buyout can be achieved by agreeing to waive your interest in some of the assets your spouse wants. For example, you may agree to let your spouse keep the marital home in return for your keeping the business.
- If a trade-off can’t be arranged, our New Orleans business lawyers may recommend a long-term buyout where you keep the business and agree to pay your spouse her/his share on a monthly basis (like a loan or a mortgage) until the buyout terms are satisfied. In some cases, the business will be sold and the assets divided between the spouse.
Some of the factors to consider if you are divorcing and have a business include:
- Does your spouse have any interest in the business aside from the financial interest? For example, if you and your spouse owned a bakery together, you and your spouse might agree to own the business jointly after the divorce. You and your spouse might also agree that you own the business and your spouse receives a salary.
- Is there a child support obligation or a spousal support obligation? If so, then both spouses will likely want the business to continue so the income from the business can be used for child support or spousal support.
- Is there a partnership agreement? Some partnership agreements provide protection for the partners in the event of a divorce. At the Law Office of James A. Graham, we’ll review the rights of the spouses and the rights of the partners.
There are likely many other considerations. For example, we’ll review your ability to obtain new work if the business is sold.
How can I protect my interest in a business in the event of a divorce?
As we discussed, there are many steps to consider when the divorce is filed – such as whether a buyout is viable, if the business should be sold, and the value of the business.
There are also strategies we’ll review if you meet with us before the divorce is filed. Your ability to protect your business or business income, along with child support and spousal support obligations, may depend on whether you were paying yourself a salary. Remember, for every dollar you invest back into the business, your spouse will have an interest in an increase in value of the business. It may be better to pay yourself a salary. On the other hand, your salary may be an indicator that you have significant income. We’ll review the pros and cons.
We’ll also review whether there is any desire to pass the business onto your children.
Do you have a divorce business lawyer near me?
The Law Office of James A. Graham is located in New Orleans and serves all of South Louisiana.
For clients who are unable to travel, we can schedule phone or video conferences when needed.
Contact our skilled New Orleans divorce lawyers to protect your business interests today
At the Law Office of James A. Graham, we understand the work that goes into running a business. We understand the sacrifices that both spouses make to help a business grow. Our team has the experience and resources to help you protect your business interests when the marriage ends in divorce. To discuss all your rights, including business rights, contact us to schedule a consultation with a divorce lawyer in New Orleans.