For business owners, divorce isn’t just about ending a marriage—it’s about protecting what they’ve built. When a business is part of the marital estate, dividing it can be one of the most complex and high-stakes aspects of a North Carolina divorce.
Questions like “Is my business considered marital property?”, “How do we calculate its value?”, and “Do I have to give up ownership?” often define the process. The answers depend on a mix of financial analysis, legal principles, and strategic negotiation.
At Martine Law, we represent business owners, entrepreneurs, and spouses of business owners in divorce cases across North Carolina. We understand how to balance fairness under state law with protecting your livelihood and future income.
You can review property division laws in the North Carolina General Statutes, Chapter 50 and explore resources for small business valuation through the North Carolina Secretary of State.
Is a Business Considered Marital Property in North Carolina?
North Carolina follows the rule of equitable distribution, meaning marital property is divided fairly (not always equally) between spouses.
To determine whether a business is marital, separate, or mixed, the court looks at:
- When the business was started.
- A business created during the marriage is generally marital property.
- A business owned before marriage may remain separate property—but its growth during the marriage could be marital.
- How it was funded.
- If marital funds were used for capital, operations, or improvements, a portion of the business may be marital.
- Spousal contributions.
- If one spouse helped manage, market, or grow the business—even without ownership—the court can assign marital value to that contribution.
Many businesses are hybrid property—part separate, part marital—requiring careful tracing and valuation.
Valuing a Business During Divorce
A proper business valuation is the foundation for a fair division or buy-out. In North Carolina, courts require evidence of a business’s fair market value as of the date of separation.
There are three primary valuation approaches:
- Asset-Based Approach
Determines value based on tangible and intangible assets minus liabilities.
Used for: businesses with significant equipment, property, or inventory (e.g., manufacturing, retail). - Income Approach
Estimates value based on current and projected earnings or cash flow.
Used for: service-based businesses or professional practices. - Market Approach
Compares the business to similar companies recently sold or valued.
Used when industry data or comparable transactions are available.
Because valuations involve accounting judgments, both sides may hire independent experts. The court then decides which valuation is more credible.
At Martine Law, we work with forensic accountants and business appraisers who understand both finance and family law. Our goal is to present a valuation that’s accurate, defensible, and aligned with your best interests.
How Business Valuation Affects Property Division
Once the business’s value is determined, the court uses it as part of the equitable distribution of marital assets. But that doesn’t always mean the business will be split or sold.
Courts generally avoid dividing an active company because doing so can disrupt operations or harm employees. Instead, there are several options:
- Buy-out: One spouse keeps the business and pays the other their share of its marital value.
- Offset with other assets: The spouse keeping the business gives up a larger share of other property, such as real estate or retirement funds.
- Installment payments: If a lump-sum buy-out isn’t feasible, payments can be structured over time.
- Sell and divide proceeds: In rare cases, especially when neither spouse can run the business, the company may be sold.
The chosen approach depends on liquidity, profitability, and whether both spouses want continued involvement.
Proving or Protecting Business Value
If you own a business, protecting its value during divorce is critical. Common challenges include:
- One spouse undervaluing the business to pay less.
- The other overstating value to claim a larger share.
- Disputes over goodwill—the company’s reputation, brand, or client relationships.
North Carolina courts distinguish between enterprise goodwill (which belongs to the business) and personal goodwill (which is tied to an individual’s reputation and cannot be divided).
Our attorneys know how to separate personal from enterprise goodwill, helping business owners avoid unfair valuations that penalize their professional success.
Subpoenas and Discovery in Business-Related Divorces
When financial transparency is an issue, discovery tools can uncover hidden income or manipulated records. Attorneys may use:
- Subpoenas for business bank accounts, tax returns, or financial statements.
- Depositions of accountants or business partners.
- Requests for production of sales reports, contracts, or payroll data.
Courts expect full disclosure. Failing to provide records or attempting to hide assets can result in financial penalties and an unfavorable property division order.
Buy-Outs: How They Work
A buy-out allows one spouse to keep the business while compensating the other for their share. There are several ways to structure it:
Lump-Sum Buy-Out
- The owning spouse pays the other spouse’s share in one transaction.
- Often funded by refinancing, borrowing, or liquidating non-essential assets.
Installment or Structured Buy-Out
- Payments are made over time, sometimes with interest.
- May include provisions for default or business failure.
Offset with Property
- Instead of cash, the non-owner spouse receives other marital assets of equal value (e.g., retirement accounts, vehicles, or real estate).
Each method has tax and cash-flow implications. A skilled attorney ensures the terms are fair and sustainable for the client keeping the business.
Protecting Business Interests Before or During Marriage
Many business owners take proactive steps to protect their companies from future disputes:
- Prenuptial or postnuptial agreements: Define what happens to the business in the event of divorce.
- Operating agreements or shareholder restrictions: Limit ownership transfer to spouses.
- Accurate financial records: Maintain clear separation between business and personal funds.
- Fair compensation: Pay yourself a market-based salary to avoid disputes about hidden marital income.
If no such protections exist, it becomes even more important to have experienced counsel during the divorce process.
How Martine Law Supports Business Owners in Divorce
For business owners, a divorce can feel like a threat to everything you’ve worked for—but it doesn’t have to be. At Martine Law, we protect your livelihood while pursuing a resolution that’s fair and financially sound.
Our attorneys:
- Work with forensic accountants to determine accurate valuations.
- Challenge inflated or incomplete financial analyses.
- Negotiate buy-outs that preserve your company’s stability.
- Develop creative solutions to avoid forced sales or disruption.
- Ensure all tax and legal implications are fully addressed.
You’ve built your business with dedication and effort—now let us help you protect it.
Contact Martine Law today to speak with an experienced family law attorney about your case and your options for valuation and buy-out strategies.