Building a business from scratch means long nights, tough decisions and pouring everything you have into making it work. So when divorce enters the picture, you naturally wonder what it means for your business. Understanding how Indiana courts handle business assets helps you prepare for what’s ahead.
Indiana treats most businesses as marital property
Indiana courts treat almost everything you own as part of the “marital pot” that needs dividing. Under Indiana Code 31-15-7-4, all property owned by either spouse is subject to division. That includes businesses. Indiana Code 31-15-7-5 also states that “fair” usually means an equal split, but that becomes challenging if your spouse had nothing to do with the business and its growth. These factors can affect how the business is treated in a divorce.
Assessing what your business is worth
Before anything is divided, the court needs to know what your business is actually worth. Business valuation examines profit margins, equipment, inventory, customer relationships and reputation. This process determines what someone would realistically pay if they wanted to buy your business. Most business valuations require a forensic accountant to analyze financial records and provide a professional opinion on the business’s worth.
Your options for keeping the business
After the value of your business is established, you have several paths to choose from, including:
- Buyout: You keep the business and your spouse receives other assets of equal value. This might mean they get a larger share of retirement accounts or home equity. In case the other assets won’t cover the balance, you may arrange a payment plan.
- Sell and split: Sell the business and divide the proceeds between the two of you.
- Continue as co-owners: This arrangement is not usually encouraged by the court, but in rare cases, former spouses continue as business partners.
Which path makes sense for you depends on your finances, priorities and what other assets are available to divide.
Proper planning matters
Getting an accurate valuation protects you from paying too much or accepting too little. It is advisable to start pulling together your financial records because the sooner you organize everything, the easier this process becomes. In situations like this, you may consider seeking legal guidance from someone who understands both Indiana divorce law and business valuation.