Post Tagged with: "Getting a divorce"

After Divorce, What Will Happen to Your Business?

June 14, 2018 at 8:35 pm Comments are Disabled

Divorced couple in a business meetingIf you or your spouse is planning on filing for divorce, you need to know the potential impact it might have on your business. You slaved away on your own to make your business as successful as can be and naturally don’t want to be “in business” with your ex-spouse when you divorce. But how exactly does divorce affect business ownership?

How Divorce Might Impact Your Business

Generally speaking, you might have to be business partners with your ex-spouse or give up half of your business if you live in a community property state or an equal amount if you live in an equitable division state. While this isn’t probably what you wanted to hear, it could happen if you fail to plan for the eventuality of divorce when you started your business, the Law Office of Dorene A. Kuffer warns.

Fortunately, giving your ex half of your business could also mean that you could use marital assets to pay your ex. Rather than handing your ex half of your business, you could have your marital assets divided and offer your ex-spouse an extra share of these, so you could keep the business solely to yourself. Your ex-spouse won’t have anything to do with your business. It’s likewise possible that you liquidate your business so you and your ex-spouse could just split the proceeds.

Property Division

If you established your business before marrying your spouse, your business would be considered separate property. On the other hand, plenty of businesses tend to lose their separate property status during marriage, and if the value of the business increased during the marriage, the court might deem the value increase as marital property. This means that the business would be subject to property division in a divorce. Additionally, your business would be subject to distribution if your spouse contributed to it and if it was established while you were already married.

You either become business partners with your ex-spouse or liquidate your business and share the proceeds with your ex. Divorce and business simply don’t mix. Fortunately, even if you co-own your business with your spouse, you could plan to avoid issues when you get divorced. Consult a divorce lawyer and financial advisor to help you safeguard your business if you’re filing for divorce.