As a business owner, your life is filled with challenges and responsibilities—from managing operations to making key decisions that drive growth. Adding the stress of divorce to the equation can feel overwhelming, especially when your business is one of your most valuable assets. At Hillers Legal, P.C., we understand the unique complexities of a business owner’s divorce and are here to provide the experienced legal guidance you need to protect your livelihood and future.

Dividing business interests during a divorce requires specialized knowledge and a tailored approach. Whether you own a small family-run business, a professional practice, or a larger enterprise, we’ll work with you to develop a strategy that protects your interests while helping you achieve an equitable outcome.

Unique Challenges in a Business Owner’s Divorce

One of the most significant challenges in a business owner’s divorce is determining whether the business is marital property and, if so, how its value should be divided. Questions such as “Will the business need to be sold?” or “Can one spouse retain ownership?” often arise.

A court determines whether a business is a marital asset by considering various factors, including the contributions of each spouse to the business and the marriage, the timing of the acquisition of the business, and the appreciation of the business during the marriage.

• Contributions of Each Spouse: Courts look at both direct and indirect contributions to the business and the marriage. For example, in In re Marriage of Miller, the court found that the wife was entitled to a share of the family farm corporation because she significantly helped with farm activities, accounting, and household services, and the corporate assets were acquired during the marriage through joint efforts (In re Marriage of Miller, 552 N.W.2d 460 (1996)). Similarly, in In re Marriage of Grady-Woods, the court recognized the wife’s indirect contributions to the business by maintaining the home and providing marital companionship, which allowed the husband to focus on the business (In re Marriage of Grady-Woods, 577 N.W.2d 851 (1998)).
• Timing of Acquisition: The court considers whether the business was acquired during the marriage. In In re Marriage of Miller, the corporate assets were acquired during the marriage, which contributed to the court’s decision to include the business as a marital asset (In re Marriage of Miller, 552 N.W.2d 460 (1996)).
• Appreciation During Marriage: The court examines whether the appreciation of the business during the marriage was due to the efforts of either or both spouses. In In re Marriage of Grady-Woods, the court found that the appreciation of the business was due to the husband’s hard work, but also acknowledged the wife’s indirect contributions, making it inequitable to exclude her from the appreciated value (In re Marriage of Grady-Woods, 577 N.W.2d 851 (1998)). Additionally, in In re Marriage of Lattig, the court considered whether the appreciation was fortuitous or due to the efforts of the parties, emphasizing that an equitable division should reflect the tangible contributions of each party (In re Marriage of Lattig, 318 N.W.2d 811 (1982)).
• Equitable Distribution Factors: Iowa Code Annotated § 598.21 outlines several factors the court must consider in dividing property, including the length of the marriage, contributions of each party, age and health of the parties, earning capacity, and other relevant factors (I.C.A. § 598.21). These factors help the court determine what is equitable in each specific case.
• Exclusion of Post-Dissolution Efforts: The court may exclude the value of the business attributable to one spouse’s efforts after the dissolution. In In re Marriage of Russell, the court excluded the value of the business that resulted from the husband’s post-dissolution efforts (In re Marriage of Russell, 473 N.W.2d 244 (1991)).

Based on these principles, a court will evaluate the specific circumstances of each case to determine whether a business is a marital asset and how it should be divided equitably.

At Hillers Legal, P.C., we’ll help you address these challenges by:

• Determining whether the business (or parts of it) qualifies as marital property
• Exploring options to buy out your spouse’s interest if necessary
• Protecting your ownership and operational control of the business whenever possible

Valuing Your Business Accurately in a Divorce

A critical step in the divorce process is determining the value of your business. Unlike personal property, businesses can be complex assets that include not only tangible items like equipment but also intangible assets such as goodwill, brand value, and intellectual property.

• Courts often rely on expert testimony to determine the value of a business in an Iowa divorce. However, the Iowa divorce courts are not bound to accept any single valuation and can consider all evidence presented, including the credibility of the experts and the parties (In re Marriage of Dennis, 467 N.W.2d 806 (1991)).
• The fair market value of the business is typically used if it can be reasonably ascertained. For instance, in In re Marriage of Frett, the court accepted the higher valuation of the business provided by one party’s expert (In re Marriage of Frett, 686 N.W.2d 235 (2004)).
• Valuation methods can include the capitalization of earnings, book value, and market value of assets. In In re Marriage of Wiedemann, the court used a combination of capitalized earnings and book value to determine the value of a closely held corporation (In re Marriage of Wiedemann, 402 N.W.2d 744 (1987)).
• The court may exclude the value added to the business due to one spouse’s efforts post-dissolution, as seen in In re Marriage of Russell, where the court excluded the increase in value attributable to the husband’s post-dissolution efforts (In re Marriage of Russell, 473 N.W.2d 244 (1991)).
• The court also considers the tax consequences of the valuation and potential future sales, as in In re Marriage of Friedman, where the court found it inappropriate to reduce the value of stock based on hypothetical future tax consequences (In re Marriage of Friedman, 466 N.W.2d 689 (1991)).
• The court may also consider the desirability of awarding the business to the spouse who is more capable of managing it post-dissolution, as seen in In re Marriage of Dennis (In re Marriage of Dennis, 467 N.W.2d 806 (1991)).

This valuation forms the foundation of your case, ensuring that any property settlement reflects the true worth of your business.

Navigating Spousal Contributions and Ownership

Many businesses benefit from the contributions of both spouses, whether directly through day-to-day operations or indirectly by supporting the business owner. Accurately evaluating these contributions is essential for achieving a fair division of assets.

We’ll help you analyze key factors, including:

• The extent of each spouse’s involvement in the business
• Financial and non-financial contributions to the business’s success
• Any agreements or contracts, such as a prenuptial agreement, that may affect ownership

By addressing these issues with care, we’ll help ensure an equitable resolution that protects your business and reflects the contributions of both parties.

Protecting Your Business Operations and Future

Your business is more than just an asset—it’s your livelihood and a reflection of years of hard work. At Hillers Legal, P.C., we’re committed to helping you safeguard the business you’ve built while ensuring a fair settlement that allows both parties to move forward.

We can help you explore options such as:

• Retaining sole ownership of the business through a buyout
• Structuring settlements to minimize disruption to business operations
• Negotiating terms that preserve your financial stability

Your Path Forward

Divorce can feel like an uncertain time, but with the right legal team, you can take control of the process and protect what you’ve worked so hard to build. At Hillers Legal, P.C., we’re here to provide clarity, support, and a plan for the future.

Schedule Your Consultation Today

Navigating divorce as a business owner requires a skilled and experienced legal team. At Hillers Legal, P.C., we understand the unique challenges you face and are ready to help you protect your business, your assets, and your peace of mind.

Call us today at 515-981-2004 to schedule your consultation. Let us help you take the first step toward a clear and secure future.