A business in the marital estate.
When one or both spouses own an operating company, a professional practice or an interest in a partnership or LLC, the divorce has to answer three questions: how much of it is marital, what it is worth, and how to divide value without breaking the business. This guide explains the general framework. It is general information, not advice about your company.
Marital, separate, or both
Colorado presumes that property acquired by either spouse during the marriage and before a decree of legal separation is marital, however title is held. Listed exceptions include property acquired by gift, bequest, devise or descent, property acquired in exchange for premarital or gifted property, and property excluded by a valid agreement of the parties. See C.R.S. § 14-10-113(2) and (3).
A business started or bought before the marriage is not automatically outside the divorce. Under C.R.S. § 14-10-113(4), a premarital or gifted asset is treated as marital property to the extent its present value exceeds its value at the time of the marriage, or at the time of acquisition if acquired later. That makes the value on the date of marriage, and good records of it, important. A premarital or marital agreement may change the result, so any such agreement should be reviewed early.
Valuation
Colorado law values property as of the date of the decree, or the date of the hearing on property if that comes first (C.R.S. § 14-10-113(5)). For a private company there is no market price, so value usually comes from a qualified business valuator using one or more recognized approaches:
- Income approach: what the business is expected to earn, converted to a present value.
- Market approach: what comparable businesses or interests have sold for.
- Asset approach: the value of the business's assets less its liabilities.
Disputes often turn on the details: normalizing the owner's compensation, personal expenses run through the business, unusual transactions near the time of separation, how much of the value depends on the owner personally rather than the enterprise, and whether discounts for a minority interest or lack of marketability fit the facts. A forensic accountant can test the books against bank records and tax returns.
Read the governing documents. Operating agreements, partnership agreements, shareholder agreements and buy-sell agreements can restrict transfers, set a price formula or require consent to a change in ownership. Those terms may affect value and limit how an interest can be divided; how much weight they carry in a divorce depends on their wording and the facts.
Dividing value without dividing the company
Courts and parties usually avoid making former spouses co-owners. Common structures include awarding the business to the owner spouse and offsetting with other assets, a buyout paid over time with security for the payments, or a sale when neither spouse can or should keep the business. Each choice has tax, cash-flow and lender consequences, so the structure should be tested with an accountant before it is agreed.
During the case, both spouses have an interest in the business continuing to operate normally. Large unusual transfers, new debt, changed compensation or delayed receivables can become issues in the case, and the business records will often be requested in discovery.
Documents to gather
- Formation documents, operating or partnership agreement, bylaws and any buy-sell agreement
- Business tax returns, K-1 forms and financial statements for several years
- General ledger, bank and credit card statements, loan documents and personal guarantees
- Any prior valuation, appraisal, offer to buy, or equity transaction
- Owner compensation records, distributions and capital account history
- Records showing the business's value on the date of marriage, if it existed then
Sources
Statute text: C.R.S. § 14-10-113, Colorado Revised Statutes 2026, Title 14, published by the Colorado Office of Legislative Legal Services (Title 14 text; 2026 C.R.S. titles on leg.colorado.gov).
This page is general information about Colorado law as of October 2026. It is not legal, tax or financial advice, and it does not predict the outcome of any case.