Depending on the state, there are different doctrines that courts use to divide assets in a divorce. In Ohio, courts divide assets according to the equitable distribution doctrine, which is the division of property between the parties based on what is fair and just.
Under this doctrine, the judge does not necessarily have to divide assets 50/50, but instead, it must it strive to divide them fairly.
What happens to the business?
A business is property and subject to distribution in Ohio divorces. In order to decide if the business goes to one party or to both, the court first determines whether the business is marital property or separate property.
Marital property
Marital property is property owned by the couple in a divorce. Usually, it’s property gained during the marriage, but it can also include pre-marital property if commingled.
If a business is owned by one party before marriage and the other spouse starts working for or contributing to the business after the marriage, it can be classified as marital property or a mix of both.
Separate property
Separate property is property gained prior to the marriage. It can also include an inheritance or gift given exclusively to one party during the marriage.
Marital and separate
In certain cases, the court will identify that the business is a combination of both marital and separate. For example, in cases where one person opened a business before the marriage, and after the marriage, both spouses worked on it and invested in it.
Ohio divorces and equitable distribution
When a couple gets a divorce in Ohio, the courts separate all property according to what the judge thinks is fair. This may mean that each spouse gets 50% of the property or it could mean that one party gets more or less than the other.
The judge considers various factors when dividing marital assets in an Ohio divorce and has the authority to divide property as they see fit. If the property is separate and not marital, the judge cannot split it because it belongs to the individual who owns it.
Who owns the business?
Businesses can fall under marital property or separate property, or both. What happens to a business in an Ohio divorce depends on how the court labels it – as marital property, separate property, or a mix of both.
Ownership and options
Once the court classifies the business, it can either give it to one party, divide it, or distribute only the portion that is marital property. In cases where some of it is marital and some of it is separate, the judge can, for example, decide that 30% of the business is marital and 70% is separate property, and then only divide the 30% equitably or fairly.
In such cases, the parties can also come to an agreement themselves where one party buys out the other party’s portion of their ownership of the business.
Dividing assets in a divorce can be a complicated process, and if you own a business, it can make it even more complex. However, the law provides ways in which the court must handle it.