When a married couple in Minnesota decides to divorce, dividing property can quickly become complicated—especially when a business is involved. Whether it’s a family-owned retail shop, a professional practice, or a startup, a business can be one of the most valuable (and emotionally charged) assets in a divorce.

At Martine Law, we work closely with clients who want to protect their financial future and secure a fair division of marital property. Here’s what you need to know about how business assets are handled in a Minnesota divorce.

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Is the Business Marital or Non-Marital Property?

The first step in dividing a business during divorce is determining whether it is marital or non-marital property.

Marital Property

Marital property includes most assets acquired during the marriage, regardless of whose name is on the title. If the business was started during the marriage, it is generally considered marital property and subject to division.

Non-Marital Property

A business may be considered non-marital if:

It was started before the marriage
It was inherited or gifted to one spouse
It was explicitly excluded in a prenup or postnup

However, even non-marital businesses can have marital value if the other spouse contributed to its growth or operations. This is where things often get complicated.

Valuing the Business

Before a business can be divided, it must be accurately valued. This is typically done by a business valuation expert, and it may involve:

Review of financial statements and tax returns
Assessment of assets and liabilities
Evaluation of goodwill and earning potential

Minnesota courts prefer objective data, which is why professional appraisals play a key role.

The IRS also outlines standard practices for business valuation, which are sometimes used in family court. You can read more about their approach in the IRS Business Valuation Guidelines.

Common Business Valuation Methods

There are three primary methods used:

Asset-Based Approach: Looks at the company’s total assets minus liabilities
Income Approach: Focuses on the company’s profitability and future earning potential
Market Approach: Compares the business to similar companies that have been sold

The chosen method depends on the type of business, its financial stability, and the availability of reliable records.

Options for Dividing a Business in Divorce

Once the business is valued, couples have a few options for division:

1. One Spouse Buys Out the Other

One of the most common solutions is for one spouse to retain full ownership and buy out the other’s share. This can be done via:

Lump sum payment
Property offset (e.g., giving the other spouse more of the house or retirement account)
Structured payments over time

2. Co-Ownership Post-Divorce

Though less common, some couples agree to co-own the business after divorce. This requires a high level of trust and ongoing cooperation.

If you’re considering this route, it’s critical to have a clear operating agreement outlining responsibilities, decision-making power, and what happens if one party wants to sell.

3. Sell the Business and Split the Proceeds

If neither spouse wants to keep the business or a buyout isn’t financially feasible, the business may be sold and the proceeds divided equitably.

This option can be difficult if the business is not easily sellable or if both parties are emotionally invested in it.

How Courts Decide Business Division

Minnesota follows the principle of equitable distribution. This means assets are divided fairly, not necessarily equally.

When determining what’s fair, courts consider:

Length of the marriage
Contributions of each spouse (financial and non-financial)
The role each spouse played in the business
Economic circumstances of each party
Tax consequences
Future earning potential

If one spouse was the primary operator while the other supported the household or contributed behind the scenes, that will be factored in.

What About Professional Practices?

Medical, legal, or financial practices present unique challenges. While a spouse can’t be forced to “give” a piece of their law or dental practice to the other, the value of that business is still considered marital property and may require compensation.

If you’re a professional facing divorce, you need experienced legal help to protect your license, livelihood, and future.

Protecting a Business Before Divorce

There are a few smart steps you can take before a divorce is ever filed to protect a business:

Prenuptial or Postnuptial Agreement: Specify how the business will be handled in case of divorce.
Shareholder or Operating Agreements: These can limit transfer of ownership or outline what happens in the event of a spouse’s divorce.
Keep Records: Maintain separate financial records to clearly distinguish between marital and non-marital portions.

Even if you’re already facing divorce, a skilled divorce attorney can help make a case for protecting your business.

Business Division and Spousal Support

Owning a business may also affect spousal support (alimony). If one spouse keeps a profitable business, that could reduce their entitlement to support—or increase their obligation to pay.

Judges evaluate:

Income from the business
Lifestyle established during the marriage
Earning capacity of each spouse

Make sure your lawyer reviews how business valuation aligns with potential spousal maintenance awards.

FAQs About Dividing a Business in Divorce

Can I hide part of my business to protect it?

No—and doing so is extremely risky. Courts take asset concealment seriously and may penalize the offending spouse. Full transparency is not only expected, it’s legally required.

Can my spouse get half the business even if they didn’t work in it?

Yes, depending on how the business was funded or supported. Non-financial contributions—like raising kids or supporting your career—count in Minnesota.

Will I lose control of my company?

Not necessarily. With the right legal representation, many business owners are able to retain full ownership through buyouts or negotiated settlements.

Talk to a Minnesota Property Division Lawyer

Dividing a business during divorce is never simple. It takes financial insight, legal knowledge, and strategic negotiation to reach a fair and practical outcome.

At Martine Law, we have experience handling high-value and business-heavy divorces. Our attorneys will work to ensure your hard work is protected and that the division aligns with Minnesota law.

How is a business divided during divorce in Minnesota?