Dividing Family Business

Answer:

Family businesses are difficult elements for us to assess. In many cases, we have worked with clients who had worked for a family business and had received shares or portions of that business from relatives. The burden has initially been upon us in these cases to prove that the grant of shares in the business was not in exchange for work provided. If the grant had been in exchange for work, the shares of the business or marital property had not been earned during the marriage.If the shares had been granted as a gift from the other family members, the shares are then considered separate property. In this case, there is still a question as to whether there has been any increase in value in the family business subsequent to the grant of the shares. If there has been, then the other party can try to prove that the increase in value was due to the efforts of her or his spouse, rather than because of market forces.If the increase was due solely to market forces, then the other spouse is not going to be entitled to any share of that business. That is a difficult thing to prove with a business, however. If the value of the business has increased due to the efforts, in any way and in any measure, of the spouse who has been gifted the shares, then the other spouse has a claim to some of that appreciation in value.