Divorce and Asheville’s Booming Brewery Scene: How to Handle Dividing Business Interests When You Own a Local Business
Asheville’s thriving brewery scene is one of the key elements that gives the city its charm and has made it a destination for beer enthusiasts from around the country. With more breweries per capita than nearly any other city in the U.S., Asheville has earned its reputation as a craft beer mecca. However, for local brewery owners, the personal and financial challenges of divorce can pose a serious threat to the business they’ve built.
Divorce can be complex, but it becomes even more complicated when business ownership is involved. For brewery owners and entrepreneurs in Asheville, dividing business interests during divorce can be one of the most critical and contentious aspects of the process. Whether you co-own the brewery with your spouse or are the sole owner, understanding how North Carolina law handles business assets in divorce is essential for protecting your livelihood and ensuring a fair division of property.
In this article, we’ll explore the key issues facing Asheville brewery owners who are going through a divorce, including how business valuation works, the factors courts consider in equitable distribution, and strategies for protecting your business interests.
Understanding Equitable Distribution in North Carolina
North Carolina is an “equitable distribution” state, which means that marital property is divided between spouses in a way that is considered fair and just—though not necessarily equal. Marital property includes assets acquired during the marriage, while separate property consists of assets acquired before the marriage or by gift or inheritance.
If you own a brewery in Asheville, the first question that arises is whether the business is considered marital or separate property. Even if the brewery was started before your marriage, it could still be considered partially marital property if its value increased significantly during the marriage or if both spouses contributed to its growth. The portion of the business deemed marital property will be subject to division in the divorce.
Business Valuation in Divorce
Valuing a business is a critical step in determining how business interests will be divided. In the case of a brewery, several factors must be considered to assess its true value. Brewery ownership involves not only physical assets, such as equipment, property, and inventory, but also intangible assets like brand reputation, intellectual property, customer loyalty, and future earnings potential.
For many brewery owners, the thought of placing a monetary value on their business can be daunting, especially when emotions run high during a divorce. To determine the value of your brewery, it’s common to bring in a business valuation expert who can provide an objective assessment. Valuation methods may include:
- Income Approach: This approach looks at the brewery’s current and projected revenue, profitability, and potential future earnings to determine its value.
- Market Approach: This approach compares your brewery to similar businesses that have recently sold to estimate its market value.
- Asset-Based Approach: This approach calculates the value of the brewery’s tangible and intangible assets, such as equipment, real estate, intellectual property, and goodwill.
An accurate valuation is essential for ensuring that both parties receive a fair share of the marital estate. If one spouse wants to retain ownership of the brewery, they may need to buy out the other’s share based on the business’s valuation.
Dividing Business Interests in Divorce
Once the brewery’s value has been established, the next challenge is determining how the business interests will be divided. This process depends on several factors, including the involvement of both spouses in the business, the ownership structure, and whether either spouse wishes to continue running the brewery.
1. Co-Ownership vs. Sole Ownership
If both spouses co-own and operate the brewery, dividing the business becomes particularly tricky. In many cases, it’s not practical for ex-spouses to continue working together after a divorce. As a result, one spouse may agree to buy out the other’s interest in the brewery. Alternatively, the couple could sell the brewery and split the proceeds, though this is often a last resort for passionate business owners.
If only one spouse is the brewery’s owner, the non-owner spouse may still be entitled to a portion of its value. This is especially true if the non-owner spouse contributed to the business in some way—whether by handling administrative tasks, providing financial support, or helping with marketing and events.
2. Spousal Contributions
In North Carolina, courts will consider the contributions of both spouses when dividing business interests. If the non-owner spouse played an active role in the brewery’s success, their contributions will be taken into account when determining how much of the business’s value they are entitled to.
Even if the non-owner spouse did not have a direct hand in running the brewery, they may have indirectly supported the business by taking care of the household or children, allowing the owner spouse to focus on growing the brewery. These indirect contributions can also affect how the court divides business assets.
3. Retaining Business Ownership
Many brewery owners prefer to retain full control of their business after a divorce rather than sell it or split ownership. If this is the case, the spouse who wishes to keep the brewery may need to buy out the other spouse’s share of the business. This could involve making a lump-sum payment, negotiating a long-term payment plan, or offering other marital assets—such as real estate or retirement accounts—in exchange for the business interest.
It’s important to work with a financial advisor and an attorney to ensure that you can afford to buy out your spouse’s interest without jeopardizing the financial stability of the brewery.
Protecting Your Brewery During Divorce
For many business owners, the brewery is not just a source of income but a labor of love and personal achievement. Protecting your brewery during divorce requires careful planning and negotiation. Here are some strategies to consider:
1. Prenuptial and Postnuptial Agreements
If you own a brewery or plan to start one, a prenuptial or postnuptial agreement can help protect your business interests in the event of a divorce. A prenuptial agreement, signed before marriage, can specify how business assets will be treated and divided, ensuring that you retain control of the brewery.
A postnuptial agreement can be created after marriage and can address similar concerns, especially if the brewery was established or expanded during the marriage. Both agreements can minimize conflict and uncertainty by setting clear expectations in advance.
2. Business Structure and Agreements
If you co-own the brewery with business partners or investors, it’s important to have a solid operating agreement in place. This document should outline what happens to business ownership in the event of a divorce and establish protections to prevent a spouse from gaining control of the business.
For example, many operating agreements include “buy-sell” provisions, which allow other partners to buy out a divorcing spouse’s share of the business before it’s sold to an outside party. These agreements can be an invaluable tool for protecting the integrity of the brewery and ensuring that the business continues to thrive.
3. Negotiation and Mediation
Negotiation and mediation can be effective ways to resolve disputes over business assets during divorce. Instead of leaving the decision in the hands of a judge, mediation allows both spouses to work together with a neutral third party to reach a mutually agreeable solution.
Mediation can help brewery owners preserve their business while still ensuring a fair division of assets. It can also be less costly and time-consuming than going through a lengthy court battle.
The Emotional Toll of Dividing a Business
Divorce is emotionally challenging, and dividing a business that you’ve poured your heart and soul into can add an extra layer of stress. Brewery owners in Asheville often have deep personal ties to their businesses, making it even more difficult to think about dividing or selling the company.
It’s important to take care of your emotional well-being during this process. Surround yourself with a strong support network of friends, family, and professionals who can help you navigate the challenges of divorce and business division.
Conclusion
For Asheville brewery owners, divorce presents unique challenges when it comes to dividing business interests. Whether you co-own a brewery with your spouse or are the sole owner, it’s important to understand how North Carolina law treats business assets in divorce and take steps to protect your business.
By obtaining an accurate business valuation, considering spousal contributions, and exploring options for retaining ownership, you can navigate the complexities of dividing business interests while minimizing the impact on your livelihood. Working with an experienced Asheville divorce lawyer will ensure that your rights are protected and that you can continue to grow and thrive in Asheville’s vibrant brewery scene.
At The McKinney Law Group, we take pride in providing exceptional legal support to clients across Florida and North Carolina. Our focus encompasses a wide range of services, including family law, estate planning, and divorce matters. With a deep understanding of the complexities involved in these areas, our dedicated team is committed to delivering personalized solutions that cater to the unique circumstances of each client. Whether you are located in Tampa Bay, Florida, or Asheville, North Carolina, we are here to assist you every step of the way.
Our seasoned professionals understand that legal challenges can be daunting, which is why we emphasize a client-centered approach. We work closely with you to identify your needs and goals, ensuring that our strategies align with your specific situation. With offices conveniently located in both states, we are always prepared to offer expert guidance and compassionate support, no matter where you are.
If you have inquiries about prenuptial or postnuptial agreements, require assistance with estate planning or wills, or need professional legal counsel regarding family law issues—including high asset divorces—we encourage you to reach out to Damien McKinney. He can be reached at 813-428-3400 or via email at [email protected]. Damien is ready to provide you with a thorough consultation, helping you navigate your legal journey with confidence.
Moreover, we understand that convenience is key in today’s fast-paced world. That’s why we offer streamlined online services for creating prenuptial agreements, making it easier than ever to address your legal needs from the comfort of your home. Contact us today to learn more about how our online prenup options can simplify your experience and provide you with peace of mind.