Division of Property in Divorce
In a divorce proceeding in North Dakota, the division of property, including a family business, is governed by the principles of equitable distribution. This means that the court will divide the marital property in a manner that it deems fair and just, but not necessarily equal. The court will consider a variety of factors in making this determination, including the duration of the marriage, the age and health of the parties, their earning abilities, and the conduct of the parties during the marriage (North Dakota Century Code 14-05-24).
Family Business as Marital Property
A family business can be considered marital property if it was acquired or significantly appreciated in value during the marriage. The court will typically require a valuation of the business to determine its worth. This can be a complex process, involving the examination of the business’s financial records, assets, liabilities, and future earning potential.
If one spouse owned the business prior to the marriage, but the other spouse contributed to its growth and success during the marriage, the court may consider that contribution in the division of property. The non-owner spouse may be entitled to a portion of the increase in the business’s value during the marriage.
Division of the Family Business
Once the value of the business has been determined, the court will decide how to divide it. This could involve one spouse buying out the other’s interest, the spouses continuing to co-own the business after the divorce, or the business being sold and the proceeds divided between the spouses. The court’s decision will depend on the specific circumstances of the case, including the spouses’ ability to work together post-divorce and the feasibility of a buyout.
Spousal Support and the Family Business
In addition to the division of property, the court may also consider the family business when determining spousal support. If one spouse is awarded the business and has a significantly higher income as a result, the court may order that spouse to pay support to the other. The amount and duration of support will depend on a variety of factors, including the needs and resources of the recipient spouse, the paying spouse’s ability to pay, and the standard of living established during the marriage (North Dakota Century Code 14-05-24.1).
Conclusion
The division of a family business in a divorce can be a complex and contentious issue. It requires careful valuation of the business and consideration of both spouses’ contributions and future needs. It is recommended that spouses facing this situation seek the advice of an experienced family law attorney to ensure their interests are protected.