How to Divide a Business in a Maine Divorce

Dividing a business in a Maine divorce is one of the most complex property issues a couple can face. Under 19-A M.R.S. § 953, the court must first determine how much of the business interest is marital property, then divide that portion equitably. The process requires formal valuation, careful classification, and often expert testimony.

Is the Business Marital Property?

The classification depends on when and how the business was created or acquired:

Started or acquired during the marriage: The entire business interest is presumed marital property, regardless of which spouse owns or manages it.

Owned before the marriage: The pre-marital value is separate property. But any growth in value during the marriage may be marital — and this is where the classification gets complicated.

Under § 953(2)(E), the analysis turns on whether the appreciation was active or passive:

• Passive appreciation (market forces, inflation, industry trends) remains separate property
• Active appreciation (growth resulting from either spouse's labor, management decisions, or reinvestment of marital funds) is marital property

For most small businesses, the owner's labor is the primary driver of value. A spouse who built a plumbing company from $50,000 in pre-marital value to $400,000 over 15 years of marriage will likely see most of that $350,000 growth classified as marital — because it resulted from active work, not passive market forces.

Valuation Methods

Maine courts accept several approaches to valuing a business, and the right method depends on the type of business:

Asset-based approach. Totals up the fair market value of all business assets (equipment, inventory, real estate, accounts receivable) minus liabilities. Works best for asset-heavy businesses like construction companies, farms, or rental property portfolios.

Income-based approach. Projects future earnings and discounts them to present value. The most common method for professional practices and service businesses. The discount rate accounts for the risk that future earnings may not materialize.

Market-based approach. Compares the business to similar businesses that have recently sold. Works when there are enough comparable transactions in the same industry and region — less reliable for unique or highly specialized operations.

Goodwill complicates every method. Maine courts distinguish between enterprise goodwill (value tied to the business itself — brand, location, systems) and personal goodwill (value tied to the owner's individual reputation and relationships). Enterprise goodwill is divisible; personal goodwill is more contested.

How Courts Handle the Division

Courts rarely order a business to be sold and split, especially when one spouse operates it as their livelihood. The most common approaches:

Buyout. The operating spouse keeps the business and pays the other spouse their share of the marital value — either in cash, by offsetting with other marital assets (the house, retirement accounts), or through structured payments over time.

Offset. Instead of dividing the business itself, the court awards the non-operating spouse a larger share of other marital assets. If the business is worth $300,000 and the marital home has $300,000 in equity, one spouse might keep the business while the other keeps the house.

Structured payout. When there are not enough other assets to offset, the court may order the operating spouse to make installment payments over several years.

Protecting Your Interests

If a business is involved in your Maine divorce, several steps help protect your position:

1. Get a formal business valuation from a qualified appraiser — personal estimates of what a business is "worth" carry no weight in court
2. Gather three to five years of financial records — tax returns, profit and loss statements, balance sheets, bank statements
3. Document your contributions — whether you worked in the business, managed the household to free up the other spouse's time, or contributed marital funds to operations
4. Watch for value suppression — one spouse reducing their salary, deferring revenue, or accelerating expenses to make the business look less valuable during the divorce period

The court considers financial misconduct under the economic abuse provisions of § 953(1)(D). Deliberately depressing a business's apparent value is the kind of behavior that can lead to a larger award for the other spouse.

The Maine Divorce Financial Split Guide covers the asset classification process for business interests, including worksheets for tracking marital contributions and a comparison of valuation approaches to discuss with your appraiser.

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