Will she get it even if my business & myself sink?

[LdiJ]

She is not the co-owner.....she's asking for half of my half of the business, because she believes she's entitled to it. But she does not care that the business will sink if she gets that.

Ok, so you only own 1/2 of the business and she is asking for 1/4 of it. (which means that you are not in 100% control of how you are compensated) She is absolutely entitled to 1/4 of the fair market value of the business. It does NOT mean that she is entitled to 1/2 of what you earn from the business.

Your salary is compensation for working in the business. It is fair that child support and alimony would be calculated taking your true salary into consideration.

However, the amount of any marital buyout is based on FMV, unless you can get a loan to pay her off, any buyout would be based on installment payments. I doubt any judge would require you to pay 1/2 of your annual income in installment payments to her, particularly when child support and alimony are already coming out of those payments.

So what kind of business is it? Is it a bricks and mortar business that has a fairly big chunk of physical assets? Is it a two man consulting firm that is low on physical assets and basically your and your partners contributions to the business is what makes it work?

If you and your partner decided to sell the business today, what could you get for it? She would be entitled to 1/4 of whatever that amount might be.

 

[DespMan_KC]

Whether she is entitled to 1/2 (or any portion) of the business depends on several factors:

1. When did you start the business?
2. When did you get married?
3. Were marital funds used to finance the business - either at the start or later?
4. What type of business is it? In particular, would the business be of value to anyone else besides you or is its value solely dependent on you personally?


(That brings up another reason why you'd be better of simply keeping money in the business rather than taking it out as a bonus and reinvesting. As soon as you take the money out, it could arguably become marital and by reinvesting it in the business, you may have created some marital equity. If you had the business before you were married and if you had kept the business finances completely separate from marital finances - and only taken out your salary, it would be easier to argue that there was no marital component.

1) My partner and I bought it form my dad and his partner 6 years ago
2) We've been married 14 years....we didn't have money when we wed
3) Depends on if you consider the bonuses marital funds or not. But nothing more was put in than that
4) It's a sheet metal & air conditioning company

 

[mistoffolees]

1) My partner and I bought it form my dad and his partner 6 years ago
2) We've been married 14 years....we didn't have money when we wed
3) Depends on if you consider the bonuses marital funds or not. But nothing more was put in than that
4) It's a sheet metal & air conditioning company

Then chances are that she is entitled to a significant portion of your half of the business.

The problem is going to be that she will get 1/2 of the fair market value of your share - but defining fair market value is extremely difficult for a small business, particularly one that is cyclical. Typically, HVAC businesses do not sell for a lot of money.

You have a choice. Continue to share 1/2 of your share of the profits with her indefinitely (which I think would be a terrible idea) or buy out her share at some value that the two of you can agree on.

 

[DespMan_KC]

Then chances are that she is entitled to a significant portion of your half of the business.

The problem is going to be that she will get 1/2 of the fair market value of your share - but defining fair market value is extremely difficult for a small business, particularly one that is cyclical. Typically, HVAC businesses do not sell for a lot of money.

You have a choice. Continue to share 1/2 of your share of the profits with her indefinitely (which I think would be a terrible idea) or buy out her share at some value that the two of you can agree on.

I'll still lose alot of money I don't have, but you're right, the buyout would be less painful if she agreed. Thanks for the insight.

 

[OHRoadwarrior]

It is cheaper to buy out half of a failing business, than waiting until it is successful again.