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Divorce is an overwhelming and emotional process. The majority of those who have gone through a divorce struggle to realize how their decision has affected their lives. For example, business owners have more to lose in a divorce case than those who do not own a business. Dividing property is hard and complicated. This is the reason divorcing spouses with a business must have a Birmingham divorce lawyer on their side. If you are a business owner, your attorney will make sure your business does not get affected by this life event and that you understand the possible tax considerations and processes.
In Alabama, marital assets are distributed equitably between spouses. If you own the business, your spouse may be entitled to a part of this business or half of its worth. Keep in mind that equitable division may not mean a 50/50 division in your case.
Assets acquired during your marriage are considered marital assets. Those acquired before or apart from your marriage are considered separate property. This property includes assets that aren’t comingled in your marital estate. The court in Birmingham treats nearly all property obtained following the marriage as marital property. However, exceptions exist. This can happen if spouses do not buy the property together. Determining the owner of certain assets in a divorce can be hard, so courts split assets fairly among the parties. Generally, this means that property is marital assets and must be divided in court.
Business assets obtained before your marriage or following the end of your marriage can be excluded from the division of property because the assets are considered separately owned. However, if the marriage used to benefit from the assets, or the other spouse contributed to the business, the assets may be considered marital.
During a divorce in Birmingham, the transfer should take place under conditions that are not equivalent to taxable gain or gift tax liability. Failure to do so can cost the couple a substantial amount, depending on the property’s value. If the property is incident to the divorce, you can transfer it without worrying about the taxable implications of the assets.
In addition, you should understand transfer taxes. You can avoid gift tax depending on the timing of the transfer. In some instances, you will need to transfer the property only after the issuance of the divorce decree to avoid transfer taxes. But you must know the applicability of the law to your specific situation. That is why you need a lawyer by your side. Your attorney will ensure no stone is left unturned and guide you through each step of the process.
If your business needs to be equitably divided according to law, you have the following options:
If the court considers your business as marital property, a business valuation must be conducted to determine the value of your business and your salary. Every business owner’s income is essential since it can impact child custody and support, together with spousal support. A business valuation considers things like tangible and intangible property, income, business debts, expenses, and depreciation. While you can determine the value of your business by yourself, remember that the results of the valuation can affect your finances.