Divorce is never simple, but when one or both spouses own a business, the stakes are even higher. Beyond dividing personal property, couples must also determine how to value, divide, or protect business interests. In New Mexico, divorce laws treat business assets differently depending on how and when the business was created, making professional guidance essential.
Understanding Community Property vs. Separate Property
New Mexico is a community property state. This means that assets and debts acquired during the marriage are generally considered community property and are subject to equal division in divorce. However, property owned before the marriage—or acquired through inheritance or gift—may be treated as separate property and remain with the original owner.
When it comes to businesses, determining whether the business is community or separate property can be complex. For example:
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Business started during marriage: Usually considered community property.
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Business started before marriage but grew during marriage: The increase in value may be treated as community property.
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Inherited or gifted business: May remain separate property, but income generated during the marriage could still be divided.
Business Valuation: Determining What the Business Is Worth
Before a court can determine how to divide a business in divorce, it must be properly valued. Business valuation in New Mexico often involves:
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Reviewing financial statements and tax returns
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Assessing assets, liabilities, and cash flow
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Evaluating goodwill and market value
Courts may rely on expert appraisers or forensic accountants to ensure the valuation is accurate and fair.
Options for Dividing a Business in Divorce
Once a business is valued, several options are available for division:
One spouse buys out the other – The spouse who wants to keep the business may compensate the other for their share.
Sell the business and split the proceeds – This option works best if neither spouse wants to continue operating the business together.
Co-ownership after divorce – Rare, but possible, if both spouses agree to continue running the business together.
Protecting a Business During Divorce
Divorces involving businesses can quickly become contentious. Common protective measures include:
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Prenuptial or postnuptial agreements – These can outline how a business will be handled if the marriage ends.
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Accurate financial records – Keeping detailed records prevents disputes over valuation.
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Seeking professional legal guidance – A family law attorney with business division experience can ensure the process is handled fairly.
Tax and Long-Term Considerations
Business division in divorce can have tax implications, including capital gains taxes or future income reporting issues. Failing to plan ahead could lead to unexpected financial burdens down the road. Legal and financial professionals can help structure agreements to minimize tax consequences and protect long-term interests.
Why You Need an Experienced New Mexico Divorce Attorney
Dividing a business during divorce is one of the most complex areas of family law. At Genus Law Group, we work with business owners, professionals, and spouses to ensure assets are valued correctly and divided fairly. Our team understands New Mexico’s community property laws and can guide you through negotiations, valuation disputes, and settlement agreements.
Contact Genus Law Group Today!
If you are facing divorce and have a business at stake, the choices you make now can have lasting effects on your financial future. Contact Genus Law Group at 505-317-4455 or reach out through our website to schedule a consultation with an experienced New Mexico divorce attorney. We’ll help you protect your business, your rights, and your future.
