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post #1 of 14 (permalink) Old 12-12-2016, 12:53 PM Thread Starter
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Dividing assets when a business is involved

Looking for some feedback/advice on dividing assets during a divorce.

I have been married for 14 years, we separated and H moved out 10 months ago. The last 8 years (before he moved out) I supported the family while he started a business from the ground up (he is a financial planner with his own practice). In this business it really takes years to see decent money coming in. So just for the sake of this example say H made an average of 50K per year, but now since his business is taking off he is looking at making 100K for a few years, then about 150K plus.

Will this be taken into consideration when dividing assets? It doesnt seem fair for me to get half of what the business is worth now - when the income is gonna increase drastically post divorce.

He told me that I can keep all the retirement money (which is all from my 401K, profit sharing etc) and he gets to keep all his business. UGH.

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post #2 of 14 (permalink) Old 12-12-2016, 01:16 PM
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Re: Dividing assets when a business is involved

IME courts don't look at what you think you'll be making in the future. May depend on your location.

You may have rights to half the company...

Check with an attorney, don't take anyone on the internet's word for it.

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post #3 of 14 (permalink) Old 12-12-2016, 01:32 PM
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Re: Dividing assets when a business is involved

You are probably considered 50% owner of the company. As such you will probably have some right to the value of the company's "good will" and to future earnings.

You need to talk to an attorney. This is very dependent on your state laws.

There are also books available for each state on divorce. They might address this on some level.
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post #4 of 14 (permalink) Old 12-12-2016, 01:33 PM
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Re: Dividing assets when a business is involved

Also,

Do you have anything beyond the 401K that you could keep in exchange for the future earnings of a company that you are 50% owner of? For example do you two own a house? If so you could ask to keep the house.
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post #5 of 14 (permalink) Old 12-12-2016, 01:40 PM
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Re: Dividing assets when a business is involved

Depending on how the company is set up his salary and company profits are two different entities.

It will be hard indeed to get a judge to determine future earnings.

Your hubby could just take more salary and claim less company profit depending on what type of corporation.

Definitely need a Lawyer.
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post #6 of 14 (permalink) Old 12-12-2016, 01:43 PM
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Re: Dividing assets when a business is involved

...

Last edited by MSalmoides; 12-13-2016 at 09:06 AM.
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post #7 of 14 (permalink) Old 12-12-2016, 01:45 PM
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Re: Dividing assets when a business is involved

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Originally Posted by EleGirl View Post
Also,

Do you have anything beyond the 401K that you could keep in exchange for the future earnings of a company that you are 50% owner of? For example do you two own a house? If so you could ask to keep the house.
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Depending on how the company is set up his salary and company profits are two different entities.

It will be hard indeed to get a judge to determine future earnings.

Your hubby could just take more salary and claim less company profit depending on what type of corporation.

Definitely need a Lawyer.
Personally, I think it's a bad idea to go after his livelihood like this, although she certainly is "in her rights".

If I were him, I'd just stop being employed at the company, after having a discreet, verbal discussion with the clients about changing companies, and then I'd start a new one. And now she has nothing. A company, with expenses, that she's half liable for, but that cannot produce income.

Going after someone's job, and demanding half of all their earnings going forward would of course mean you deserve whatever tricks they pull. We're not talking about a property with an income attached to it.

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post #8 of 14 (permalink) Old 12-12-2016, 01:52 PM
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Re: Dividing assets when a business is involved

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Personally, I think it's a bad idea to go after his livelihood like this, although she certainly is "in her rights".

If I were him, I'd just stop being employed at the company, after having a discreet, verbal discussion with the clients about changing companies, and then I'd start a new one. And now she has nothing. A company, with expenses, that she's half liable for, but that cannot produce income.

Going after someone's job, and demanding half of all their earnings going forward would of course mean you deserve whatever tricks they pull. We're not talking about a property with an income attached to it.
What you are not considering is that she might have a lot invested in getting that company set up and running. This is why she needs an attorney and probably a good accountant.
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post #9 of 14 (permalink) Old 12-12-2016, 01:54 PM
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Re: Dividing assets when a business is involved

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Last edited by MSalmoides; 12-13-2016 at 09:06 AM.
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post #10 of 14 (permalink) Old 12-12-2016, 02:01 PM
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Re: Dividing assets when a business is involved

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What you are not considering is that she might have a lot invested in getting that company set up and running. This is why she needs an attorney and probably a good accountant.
It's not up for consideration.

If someone wants to lay claim to your future earnings, for all time, they should expect you to do whatever you can legally to escape their claws.

Laying claim to half the income means laying claim to half the risk. And one of the risks is that the OP's H won't work for that company anymore, when he could start a new one for a one time $50 fee to the Secretary of State.

OP's H could (A) stick it out, and share half of everything that he doesn't take as salary (and if he is like me, he doesn't take much salary) or (B) increase his salary (which may require OP's approval) or (C) leave the company, keep all the future income.

Now which of these sounds like the decision you would expect someone to make? The income is the fruit of his labor, not his W's. I'm not saying she didn't help him build the company, I'm saying it doesn't matter. He is the company, because he manages the contacts, and his business is a contact / account business.


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post #11 of 14 (permalink) Old 12-12-2016, 02:02 PM
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Re: Dividing assets when a business is involved

Typically the courts will look at the last 3 years worth of income and average them together but you might be able to make the case for using the last year of income. I doubt the courts will predict the future income to be more just because of a recent upward swing but perhaps you could make the case for spousal maintenance which could be modifiable based on the income of the business. That sort of business it's rather difficult if not impossible for him to hide income.

The other way of looking at it is, well too bad you're divorcing before you can reap the benefits but that's the price you pay for being without him, and he's the one who will be working and generating those additional profits so why should he be sharing them with you?

Maybe hold off on the divorce until he has a really good year on which you can value the business. Or if he wants out of the marriage more than you do, try to negotiate a higher valuation with him. His offer to give you the 401k and leave his business alone may indicate that he's well aware of how much he'll be making in the future. Maybe that means he'll be willing to negotiate and split the difference between actual and expected earnings and base the value on $100k.
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post #12 of 14 (permalink) Old 12-12-2016, 02:13 PM
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Re: Dividing assets when a business is involved

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post #13 of 14 (permalink) Old 12-12-2016, 02:13 PM
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Re: Dividing assets when a business is involved

IME..the process of shutting down, dissolving a contracting business is neither quick nor easy. I have had to do this several times.

Even if he already has another setup..it will be tagged to the original. Seperation would need ti be absolute...Seperation is very hard.....

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post #14 of 14 (permalink) Old 12-12-2016, 03:48 PM
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Re: Dividing assets when a business is involved

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Originally Posted by MSalmoides View Post
In this situation, there are MANY creative ways he could legitimately and potentially protect income from future clients. Dissolve his existing LLC, start a new one, and move the clients over because what he does isn't tied to something you can get your hands on except the client book. This is easily done, and I've heard a hundred different permutations on how to do it over more than a beer or few.

~MS
This happens often in this kind of business. Same in Real Estate. I know people in this business who have done this, and who've threatened to do it. I personally left the family RE company, and my clients came with me. Nothing can be done about it as long as you follow the law.

If I were OP's H, I wouldn't take it laying down. No matter how good of a wife she was.

It's really not that difficult to pull off. It's complex, but not difficult.

Do you hear the people sing / Lost in the valley of the night?
It is the music of a people / Who are climbing to the light.
For the wretched of the earth / There is a flame that never dies.
Even the darkest night will end / And the sun will rise...
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