Many Alaskans own all or part of their business and use their investment to make their income. In many situations, the business’s income and capital assets allow a person to provide a comfortable living for themselves and their families.
Still, most small- and mid-sized business owners are not just passive investors. They put long hours and a lot of work into building and maintaining their organizations.
In some cases, these businesses may be a person’s lifetime achievement or may have been in the person’s family for generations.
Like other property, business interests are subject to equitable division in a divorce.
Alaskans should understand that their divorce will look different if they have signed a community property agreement, which is something Alaska allows.
In some situations, the court will use community property principles to divide the couple’s community property basically in half and allow each to keep separate property.
Even without a community property agreement, there are other cases where a person may be able to claim their interest in their business should not be divided with their estranged spouse.
Most of the time, though, in a divorce, a person’s business interest will get divided in a way that the court sees as fair and just. This division happens unless the divorcing couple can agree on how to divide the business themselves.
Practically, dividing a business interest involves a lot of legal details
It may make sense for the couple just to carry on the business as they were prior to their divorce.
For example, if the couple owns roughly equal shares in the business, and if both spouses are involved in operating the business, and if they can get along professionally despite their marital troubles, continuing the business together can be relatively simple.
However, many times, at least one spouse, and maybe both spouses, must walk away from their business interest.
Frequently, one spouse will need to buy out the other spouse’s fair share. Keep in mind that a spouse’s fair share will not always depend on whose name the business is in or even the history of the business.
Dividing the business may require a detailed expert analysis to understand how much the business interest in question is worth.
Once the business’s value is determined, the spouse who wants to keep the business interest will have to figure out how to pay the other spouse’s fair share. They may have to agree to assume additional debt or grant their ex-spouse other property.
They may need to secure financing or sell some of their property and pay off their ex-spouse in cash.