When a Family Business Becomes Part of Divorce, Stakes Run High
Dividing a business during a divorce in Washington County can be one of the most complicated and emotionally charged parts of ending a marriage. Many couples build their lives around a family business, making it more than just a source of income — it’s a symbol of shared effort, sacrifice, and future hopes. When divorce enters the picture, questions arise about whether the business is marital property subject to division or separate property owned by one spouse. How the business is classified and valued can have significant financial consequences, affecting retirement plans, daily living standards, and overall financial security.
Understanding Separate vs. Marital Property in Oklahoma
Oklahoma law distinguishes between marital property and separate property when dividing assets in divorce. Marital property generally includes assets acquired during the marriage, while separate property includes assets owned before marriage or acquired by gift or inheritance during marriage. A business started before marriage or inherited may be considered separate property. However, if marital funds or efforts contribute to increasing the business’s value, the appreciation may be subject to division.
This distinction is critical because the law allows a spouse to keep their separate property but may divide the part of the business that grew in value thanks to the marital partnership. For example, if one spouse reinvests profits back into the business, that business value might remain separate property. This principle was upheld in Marzuola v. Click, where the court ruled that the husband’s reinvestment of business earnings to pay down debt did not convert the business into marital property since he did not hide income or diminish the other spouse’s rights Okla. Stat. tit. 43 § 110.
For those navigating these issues, consulting a knowledgeable Oklahoma attorney experienced in family law can help clarify which parts of a business are subject to division and what evidence is needed to protect your interests.
Calculating the Divisible Portion of a Business
When a spouse claims entitlement to a portion of the increase in value of the other spouse’s separate property, Oklahoma courts use a formula established in May v. May. This formula helps identify how much of the business’s appreciation is marital and subject to division:
- Start with the acquisition cost or original value of the business.
- Add the cost of any improvements paid for by the non-owning spouse or with marital funds.
- Add any measurable increase in value due to the personal labor or efforts by either spouse.
- Subtract any increase in value due to inflation or market forces unrelated to the spouses’ efforts.
The result is the portion of the business considered jointly acquired and divisible. However, the non-owning spouse’s contribution cannot exceed the actual increase in value of the business Okla. Stat. tit. 43 § 110.
Understanding this formula and how it applies to your situation requires careful analysis of financial records and business valuations. A skilled divorce attorney can help gather necessary documentation and present your case effectively.
Direct and Indirect Contributions: What Counts?
Oklahoma law limits the division of business appreciation to the non-owning spouse’s direct contributions—either financial or labor-related—to the business. But what if the non-owning spouse’s role was indirect, such as managing the household, raising children, or supporting the spouse emotionally and practically during the business growth?
While these contributions might not fit the strict formula for dividing property, courts recognize the value of these roles in the marriage. This can affect spousal support or other financial considerations but may not directly increase the non-owning spouse’s share of the business itself. A careful legal strategy is required to navigate these nuances and protect your rights.
Contact an Oklahoma Attorney Today
If you are facing a divorce involving a business in Washington County, the complexities of property division can feel overwhelming. Wirth Law Office – Bartlesville can guide you through the process with clarity and care. If you need legal help, call Wirth Law Office – Bartlesville at 918-213-0950 for support tailored to your unique situation. An experienced attorney can help you understand your rights and work toward a fair resolution during this difficult time.
