Divorcing in Minnesota? Here’s What Happens to Your Small Business
Divorcing in Minnesota? Here’s What Happens to Your Small Business
Divorce is never easy, especially when you own a small business. Beyond the emotional and logistical challenges, there’s the critical question: what happens to your business when your marriage ends?
If you're a business owner in Minneapolis, St. Paul, Edina, Minnetonka, or St. Louis Park, understanding your rights under Minnesota law is essential for protecting your livelihood. Let's break down what you need to know about how divorce can impact your company — and what steps you can take to prepare.
Is Your Business Considered Marital Property?
Under Minnesota divorce law, most assets acquired during the marriage are classified as marital property — and that often includes a business. Even if one spouse solely owns and operates the company, it may still be subject to equitable distribution if it was started or grew during the marriage.
That means the court will aim for a fair, not necessarily equal, division of property. Several factors come into play, including:
- When the business was founded
- Each spouse’s role or contribution (even indirect contributions, like staying home with children)
- The business’s value and future earning potential
- The financial circumstances of both parties
How Is a Business Valued in Divorce?
Before a court can decide how to divide a business interest, the company must be professionally valued. This typically involves examining:
- Financial statements
- Revenue trends
- Assets and debts
- Market comparisons
- The owner's salary and perks
This valuation can become a contested issue in the divorce, especially if one spouse believes the other is undervaluing the company to avoid sharing its worth.
Options for Dividing the Business
Once your business has been valued, there are several possible outcomes depending on your financial situation and your spouse's preferences:
1. Buyout
The most common solution is for the owning spouse to buy out the other spouse’s share using cash, a loan, or offsetting assets (such as the marital home or retirement accounts).
2. Co-Ownership
Some couples choose to remain co-owners, especially if both played active roles in running the business. This option can work in amicable divorces but may not be sustainable long-term.
3. Sell the Business
If neither party wants to keep the business or a buyout isn’t possible, the court may order a sale of the business, with proceeds divided equitably.
Spousal Support and the Business
In many divorces, the income generated from the business affects spousal maintenance (alimony). If one spouse relied on the business owner’s income during the marriage, the court may consider ongoing support. In turn, the business owner may need to demonstrate that support payments won’t jeopardize the company’s survival.
Protecting Your Business During Divorce
If you’re not yet divorced but are concerned about future implications, consider proactive steps such as:
- Keeping personal and business finances separate
- Maintaining detailed financial records
- Having employment agreements for spouse involvement
- Consulting a divorce attorney familiar with business valuation and property division
Why Your Legal Strategy Matters
Minnesota divorce law can be complex, especially when a business is at stake. Working with a family law attorney who understands business ownership dynamics can make a significant difference in the outcome of your case.
At Michael Fink Law, PLLC, you’ll work with someone who has both legal and real-world business experience. Michael operated his own company before becoming an attorney, and he understands what’s on the line for business owners navigating divorce.
Contact Michael Fink Law, PLLC Today
If you’re going through a divorce in Minneapolis or the surrounding Twin Cities, and you own a small business, don’t leave your future to chance. Call Michael Fink Law, PLLC today to schedule a consultation. You deserve guidance that helps protect what you’ve built.
