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Business Valuation in Nebraska Divorces: What Every Business Owner Should Know

Business Valuation in Nebraska Divorces: What Every Business Owner Should Know

Discover how business valuation affects Nebraska divorces, including asset classification, valuation methods, and division options for a fair outcome.

If you’re a business owner going through a divorce in Nebraska, knowing how your company will be valued and divided is important. As one of the largest assets in the marriage, an accurate business valuation during divorce is key for a fair division. Understanding the process will help you protect your interests and make more informed decisions.

Is a Business Classified as a Marital Asset?

In Nebraska, marital assets include assets acquired during the marriage, while separate property refers to assets owned before the marriage or received through inheritance or gifts. One of the first issues to resolve in a business valuation during divorce is whether the business is considered one of the marital assets, or if a portion of the business could be treated as marital property.

If the business was started before the marriage but grew significantly during the marriage using joint efforts or marital funds, a portion of it may be considered marital property. On the other hand, if the business was created and built entirely during the marriage, the whole business could be classified as marital property.

Several factors can influence how the business is classified, including the use of joint funds, the contributions of the non-owner spouse (like helping with business tasks or giving up career opportunities), and the financial growth of the business during the marriage. A detailed business valuation during divorce helps clarify these issues.

How Business Valuation is Handled in a Nebraska Divorce

When a couple gets divorced in Nebraska, the court uses a method called equitable distribution to divide their marital assets. This means the marital assets are split in a way that is fair, but not always equal. The court will base their decision on several factors, including:

  • The length of the marriage
  • Each spouse’s financial contributions and needs
  • The income and earning capacity of each spouse
  • The contributions of a non-owner spouse to the business’s growth

For business owners, the company is often one of the most valuable marital assets. A business valuation during divorce helps determine the worth of this potential marital asset so that it can be divided appropriately between the spouses.

A business valuation during divorce involves looking closely at financial records, including marital assets, debts, income potential, and the company’s market position. Hiring an experienced professional to conduct the business valuation during divorce is advised, as errors or missing details can significantly impact the division of assets.

Methods of Business Valuation During Divorce

There are a few main ways to figure out a business valuation during divorce. Each method has a different focus:

  • Asset-Based Approach: This method looks at the business’s total assets minus its liabilities. It’s often used for companies with lots of physical assets, like equipment or property.
  • Income-Based Approach: This method focuses on the company’s income and profitability. It takes into account past earnings and future income potential to assess the value.
  • Market Approach: This method looks at the sale prices of similar businesses that were recently sold. It works best for industries where there’s a lot of data available to compare.

The choice of valuation method depends on the type of business and the financial details available. Once the business valuation during divorce is complete, the next step is figuring out how the business will be divided.

Possible Outcomes for Dividing a Business in a Divorce

Deciding what happens to a business in a divorce depends on factors like its value, each spouse’s financial needs, and their involvement in the company. Here are the most common options:

  • Buyout: One spouse can buy out the other’s share, allowing the buying spouse to keep full ownership. The other spouse receives a cash settlement or marital assets of similar value.
  • Selling the Business: Sometimes, selling the business is the best choice. The couple sells the company and splits the profits based on an agreed percentage. This works well if neither spouse wants to keep running the business, or if a buyout isn’t feasible.
  • Splitting Ownership: If both spouses want to stay involved, they may choose to split ownership. This can work if they are able to maintain a professional relationship and agree on roles and profit-sharing.

The right option will depend on the unique circumstances of both the marriage and the business. If you’re unsure which path to take, consulting an experienced divorce attorney can help you navigate the business valuation during the divorce process and explore the best solutions.

Finding the Right Legal Support for Business Valuation in Divorce

Knowing how your business is classified, how its value is calculated, and what challenges might come up can help you handle business valuation during divorce with confidence. Partnering with an experienced attorney and a skilled valuation expert will ensure that your business and other marital assets are assessed fairly and accurately. If you’re a business owner going through a divorce in Nebraska, the divorce and family law attorneys at Nebraska Legal Group are here to offer guidance and support.