Are You Entitled to Business Ownership in a Georgia Divorce?

who gets business in georgia divorce

Dividing property in a divorce is rarely simple, but when a business is involved the stakes and complexities rise quickly. Whether you are a business owner yourself or married to one, understanding how Georgia law treats business ownership during divorce is essential to protecting your financial future.

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How Georgia Divides Property in Divorce

Georgia follows the principle of equitable distribution. This means property is divided fairly, though not always equally. Courts look at each spouse’s financial and non-financial contributions, earning capacity, and future needs to decide what is equitable.

For an overview of how Georgia courts approach division of complex assets, see our page on High Net Worth Divorce.

Marital Property vs. Separate Property

To determine whether a spouse is entitled to part of a business, courts first ask: is it marital property or separate property?

  • Separate property includes assets owned before the marriage, inheritances, and gifts. Generally, separate property remains with the original owner.
  • Marital property includes most assets acquired during the marriage. Even if only one spouse’s name is on the title, it can still be considered marital property.

What Happens If the Business Was Started Before Marriage

If one spouse started a business before the marriage, the business is usually considered separate property. However, the increase in value during the marriage may be marital if it was due to the efforts of either spouse. For example, if the other spouse contributed labor, ideas, or financial support, or if marital funds were reinvested, the increase in value could be subject to division.

Businesses Started During the Marriage

If a business was formed during the marriage, it is generally considered marital property. Both spouses may have a claim to its value, even if only one spouse worked in or managed the business. The court will look closely at finances, contributions, and records to determine each spouse’s interest.

How Businesses Are Valued in Divorce

Valuation is often the most contested part of dividing business interests. Courts and attorneys may use experts such as forensic accountants or business appraisers. Common valuation methods include:

  • Asset based – the total value of assets minus liabilities
  • Income based – value determined by future income and cash flow
  • Market based – comparing sales of similar businesses

Accurate valuation is critical, as it directly affects the settlement and division of assets.

Active vs. Passive Appreciation

A key issue is whether a business grew in value due to active efforts or passive market forces. Active appreciation (growth due to labor, reinvestment, or management decisions) is often considered marital property. Passive appreciation (growth due to inflation or market changes) may remain separate property.

Impact of a Spouse’s Involvement in the Business

If the non-owner spouse contributed time, labor, or ideas to the business, courts may consider that when dividing assets. Contributions such as bookkeeping, marketing, or even managing household responsibilities to allow the other spouse to run the business can support an argument for entitlement.

Buyouts and Offsetting Assets

Courts rarely order spouses to remain co-owners of a business. Instead, one spouse may buy out the other’s interest or offset it with other assets. For example, the business owner may keep the company while the other spouse receives a larger share of retirement accounts, investments, or real estate.

High Net Worth Divorce Considerations

High net worth divorces add further complexity. Ownership structures may include multiple entities, family limited partnerships, or professional practices. Executive compensation, stock options, and intellectual property can all play a role in valuation. These cases require careful strategy and often multiple expert witnesses.

Role of Prenuptial and Postnuptial Agreements

A prenuptial agreement can specify what happens to a business in divorce. Without one, disputes over ownership and value can become lengthy and expensive. Even a postnuptial agreement signed during the marriage can clarify ownership and protect business interests.

Steps to Protect a Business During Divorce

  • Keep business and personal finances separate
  • Pay yourself a reasonable salary rather than reinvesting all income
  • Maintain accurate, independent financial records
  • Consider shareholder or operating agreements that limit transfers
  • Evaluate prenuptial or postnuptial agreements early
  • Engage an experienced family law attorney before disputes escalate

Talk to Barnhart Family Law

Dividing a business in divorce requires more than general family law knowledge. It takes experience with valuation, negotiation, and high stakes litigation. At Barnhart Family Law, we help protect your financial interests while guiding you through the process with clarity and care. Visit our pages on High Net Worth Divorce and Alimony and Spousal Support for more information, or contact us today to discuss your situation.

This article is for informational purposes only and does not constitute legal advice. Each case is unique. For advice about your situation, consult a qualified family law attorney.