Divorce is never easy, especially when a business is part of the marital estate. As the number of small and closely held businesses continues to grow, more divorcing couples in Missouri are facing complex questions about how to divide business interests fairly. In Missouri, a business—just like other property acquired during the marriage—can be considered marital property and subject to equitable distribution. But what does that look like in practice? This article explores how business assets are typically divided in Missouri divorce proceedings, how valuation works, what to do if one spouse hides income, and what to expect throughout the process.
How Missouri Courts Handle Business Division in Divorce
Missouri is an equitable distribution state, meaning marital property is divided fairly—but not necessarily equally. Courts consider a variety of factors, including each spouse’s contribution to the acquisition of property, the economic circumstances of each party, and the value of non-marital property awarded to each.
When a business is at stake, courts generally rely on one of three approaches:
1. Awarding the Business to One Spouse
In most cases, one spouse is more actively involved in the business—whether they founded it, manage its daily operations, or hold a professional license required to run it. In these cases, the court is likely to award the business to that spouse and compensate the other spouse for their share through:
- A cash payout;
- Transfer of other marital assets (such as real estate, retirement accounts, or vehicles); or
- Structured payments over time.
This approach helps maintain business continuity while still ensuring a fair division of marital property.
2. Selling the Business and Splitting the Proceeds
If neither spouse wants to continue the business, or if there’s no fair way to compensate one party without selling, the court may order the business to be sold. This approach is less common but can be used when:
- The business relies on both spouses for its success;
- There are insufficient assets to offset one spouse’s share; or
- Both parties agree that sale is the most equitable solution.
Forced sales are typically a last resort, especially for viable or profitable businesses.
3. Continuing Joint Ownership (Rare)
Joint ownership after divorce is highly unusual but may occur if both spouses:
- Play vital roles in the business;
- Are willing and able to work together post-divorce; or
- Agree to continue co-ownership voluntarily
Missouri courts are unlikely to impose joint ownership over the objection of one party.
How Business Valuation Works in Missouri Divorce Cases
In order to fairly divide a business, its value must first be determined. This process—called business valuation—is a crucial step in divorce proceedings involving closely held or private companies.
Why Business Valuation is Complicated
Most businesses involved in divorce cases are not publicly traded, which means there’s no easy way to determine market value. The value of a business may be tied to:
- Income generation;
- Customer base or contracts;
- Equipment and real estate;
- Goodwill and brand recognition; or
- The owner’s professional license or personal services
Missouri courts generally require a thorough and credible valuation, especially when one spouse is being compensated for their interest in the business.
Hiring a Qualified Business Valuation Expert
Typically, business valuation is performed by a Certified Public Accountant (CPA) who is also Accredited in Business Valuation (ABV) or holds similar credentials. These professionals evaluate:
- Tax returns (usually 3–5 years);
- Financial statements (balance sheets, income statements);
- Debt and liabilities;
- Future income potential; and
- Industry conditions and trends.
In Missouri, valuation experts often tailor their approach to align with divorce-specific standards, such as excluding certain marketability or minority interest discounts that don’t apply in equitable distribution cases.
What If the Business Is the Couple’s Largest Asset?
In many marriages, the business is the most valuable asset—sometimes more valuable than the home or retirement accounts. When that’s the case, the court must find a way to compensate the non-owner spouse without unfairly burdening the business or the spouse who will continue running it.
Possible Solutions Include:
- Structured buyouts: A payment plan that allows one spouse to purchase the other’s share over time.
- Spousal liens: A legal claim on future business income or sale proceeds to ensure the non-owner receives their share.
- Asset offsets: Awarding other marital assets of similar value to balance the division.
An experienced Missouri divorce attorney can help craft a fair settlement that protects both spouses’ financial futures.
Hidden Income or Business Assets: Red Flags and Remedies
Sometimes, one spouse may attempt to reduce the apparent value of a business before or during divorce by manipulating financial records or hiding income. This is particularly common in cash-based businesses or situations where one party has exclusive control over finances.
Warning Signs May Include:
- A sudden drop in reported income;
- Unexplained increase in business expenses;
- Running personal expenses through the business;
- Delaying contracts or payments until after the divorce; or
- Purchasing unnecessary equipment or assets to reduce profits.
How to Uncover the Truth
In Missouri, if there is suspicion that a spouse is hiding income or undervaluing a business, a forensic accountant may be hired to review records and detect discrepancies. Strategies include:
- Comparing current and historical financial documents;
- Reviewing personal bank and credit card records;
- Analyzing loan applications, which often include more honest financial disclosures; or
- Tracking household expenses and lifestyle spending.
Although this level of scrutiny can be expensive, it may be essential in high-asset cases or when the stakes are particularly high.
Using Mediation in Missouri to Resolve Business Disputes
Missouri courts encourage alternative dispute resolution methods like mediation, particularly when complex property issues like business ownership are involved.
Mediation allows both parties to work with a neutral third party to negotiate a fair division of assets. This can be a cost-effective and less adversarial option, especially if both spouses want to preserve the business and avoid public litigation.
- Benefits of mediation include:
- Greater flexibility in outcomes;
- Lower legal costs;
- Privacy and confidentiality; and
- The ability to customize payment terms or buyout structures
Missouri-Specific Legal Considerations
A few key points specific to Missouri divorce law:
- Separate property (such as a business started before marriage) can become marital property if it was commingled, grew in value during the marriage, or both spouses contributed to its success.
- Missouri courts may classify a business as part-marital, part-separate, in which case only the marital portion is subject to division.
- If a business was inherited or gifted to one spouse, it may be considered non-marital—unless the other spouse contributed significantly to its operation or growth.
These nuances make it especially important to work with a Missouri family law attorney who understands local property division standards.
Dividing business assets in a Missouri divorce is a nuanced and often emotionally charged process. Whether you’re the business-owning spouse or the one entitled to a share of the business value, your financial future may depend on how this asset is handled.
Should you need the assistance of an experienced divorce attorney in Creve Coeur, St. Charles, or O’Fallon, or have questions about your divorce situation, know that we are here to help and ready to discuss those questions with you.