Do you have to divide your business in divorce?

On Behalf of | May 24, 2024 | Property Division |

When a married couple divorces in Tennessee, they must divide their marital property in a way that meets guidelines of fairness under state law. This can be a complicated process in any divorce, but when your marital property includes ownership of a business, it can be especially tricky.

But, before you get to that point, you must first determine whether your business is considered marital property.

Marital or separate property?

Under Tennessee law, nearly everything a married couple acquires during their marriage is considered marital property, and therefore subject to property division in divorce. For the most part, anything the spouses acquired before the marriage is considered separate property, and therefore not subject to property division in divorce.

If you and your spouse acquired the business during your marriage, it is most likely part of your marital property. If one of you owned it before you got married, it may be considered separate property.

However, in many cases, it’s not so easy to determine which category covers a business. It’s common for separate property to commingle with marital property, particularly in a marriage of long duration. Even if one spouse owned the business before the marriage, the other may invest in or contribute to the business in some way during the marriage. And, if the business grew more valuable during the marriage, this added value may be considered part of the marital property.

Next steps

If your business is subject to property division, generally speaking, you have three options: Sell the business; keep the business as a co-owner with your ex; or one spouse keeps the business and purchases the other’s share.