Dividing a Business in a Divorce

Protecting your small business during a Massachusetts divorce

Divorce in Massachusetts is never an easy journey, and when you throw a business into the mix, things can get even more complicated. Massachusetts, like many other states, follows a set of laws and guidelines to ensure that business assets are divided fairly during a divorce. In this guide, we’ll explore the steps and considerations involved in dividing a business in a Massachusetts divorce, whether it’s a family-owned business, a professional practice, or any other type of enterprise.

Consult with a Family Law Attorney

The first step in navigating the division of a business in a Massachusetts divorce is to consult with a family law attorney. As with child custody when the parents aren’t married or other issues, an experienced divorce lawyer can provide you with invaluable advice and guidance specific to your situation. We can help you understand your rights and responsibilities, ensuring that you make informed decisions throughout the divorce process. 

Prenuptial and Postnuptial Agreements

One way to simplify the division of business assets in a divorce is through prenuptial or postnuptial agreements. If you have a prenuptial or postnuptial agreement in place that outlines how your business assets should be divided in the event of a divorce, it can significantly influence the process.

If you don’t have any agreements in place, you’ll want to talk to us before you tell your spouse you want a divorce. It’s important to put protections in place before the other person can take action.

Identifying Separate and Marital Property

In Massachusetts, the general rule is that property acquired during the marriage is considered marital property, subject to division, while property owned before the marriage is considered separate property. However, it’s essential to note that this division can become more complex when it comes to business assets. The ownership interest and contributions of both spouses, even in separate assets, may be factored into the division.

Valuing the Business

Determining the value of a business is a crucial step in the divorce process. The value of the company can vary widely depending on the type of business, its assets, and its market position. To get an accurate valuation, you may need to consult with a certified business appraiser or a business valuation expert. Their expertise can help you establish the fair market value or book value of the business.

Marital Funds and Business Operations

In many cases, marital funds may have been used to support or invest in the business. The contribution of joint funds to the business’s value can complicate the division of business assets. A forensic accountant may be necessary to trace the sources of these funds and determine their impact on the business’s value.

Business Partners and Ownership Agreements

If you are not the sole owner of the business, you will need to involve your business partners and review any partnership agreements or operating agreements. These legal documents often dictate how the ownership of the business is structured and may include provisions for the event of a divorce.

Equitable Distribution in Massachusetts

Massachusetts is an equitable distribution state, meaning that the court aims to divide marital assets fairly, but not necessarily equally. When it comes to dividing a business, the court will consider factors such as the length of the marriage, the financial contributions of each spouse to the business, and each spouse’s future financial needs. This can lead to a more complex process compared to community property states, where assets are typically divided equally.

The Three Options for Business Ownership

When it comes to the division of a business in a divorce, there are three primary options:

  1. One Spouse Keeps the Business: In this scenario, one spouse retains ownership of the business, often by buying out the other spouse’s share.
  2. Sell the Business: Another option is to sell the business and divide the proceeds between the divorcing couple.
  3. Continued Co-Ownership: In some cases, divorcing couples choose to continue co-owning the business, but this option requires a clear and comprehensive buy-sell agreement or an agreement on how to operate the business post-divorce.

Court Orders and the Role of a Judge

If you and your former spouse cannot reach an agreement on the division of business assets, the court will intervene. A judge will consider all relevant factors, including the business’s value, the contributions of each spouse, and the best interests of any children involved. The court order will ultimately dictate the division of property, which you both must adhere to.


Dividing a business in a Massachusetts divorce is a complex process, especially when it involves valuable assets, family-owned businesses, or professional practices. Seeking legal advice and consulting with experienced divorce lawyers is the best way to navigate this challenging situation. Keep in mind that the laws and guidelines may vary depending on your specific situation, and what works best for one divorcing couple may not be suitable for another.

Remember that understanding the nuances of property division, valuing the business accurately, and working with financial experts can help you achieve a fair and just outcome. It’s also crucial to consider your options for business ownership, from selling the business to continued co-ownership. And always keep in mind that the ultimate goal is to protect your interests while striving for an amicable resolution during a challenging time.

If you’re in the midst of a divorce involving the division of a business in Massachusetts, don’t hesitate to contact us. We can guide you through the process, ensuring that your rights and best interests are protected.

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