Boss Lady

How does divorce impact my business?

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Do you have your own company? Maybe you have worked for years to get your business up and running. Perhaps now, after a few years, you are really making great profits. All your hard work has finally paid off. The only problem is that your marriage is sadly on the rocks. Even after trying everything to make it work, divorce seems inevitable. If this is the case, you might be wondering how a divorce could impact your business. Is everything that you have worked so hard for about to crumble?

Here is all you need to know about how divorce will impact your business.

According to Online Divorce, when it comes to getting divorced, it is wise to do as much research as possible with regards to owning a company. Your business could very well be viewed as an asset, and during divorce proceedings, you might have to split all your assets. This could include your company.

Depending on all the circumstances, a business could be viewed as marital or nonmarital property. Whichever category your business falls into would determine how the asset would need to be split. The best thing to do would be to consult an attorney. An attorney can review all your assets and your business, then help you understand your options and decide what needs to be done.

When is a business viewed as non-marital property

According to Texas Law Help, a business might be viewed as separate property under these circumstances:

  • If you started the business before you got married.
  • If you inherited the business.
  • The business has been owned or placed in trust.
  • If you had a prenuptial contract in place that stated that your business would be viewed as non-marital property.

When your business is viewed as non-marital property, your spouse will not have rights to your business during divorce proceedings. But there are certain issues which could complicate things. That is why it is extremely important to have a prenuptial agreement in place that states exactly what would happen to your business if a divorce occurs.

So what issues could complicate your business if it is viewed as non-marital property?

  • If during your marriage, you decided to allow your spouse to be involved in your business, then the business would be viewed as marital property. This means that during your divorce, your spouse would have rights to your business. Under this circumstance, they could even be made a partner in your company. The same goes if you gifted any part of your business to your spouse, or if anything in the business was purchased together, during the marriage.
  • If your business grew really well during the marriage. The courts will look at how you funded your business. If you used any money from your marital estate to help your business grow, your business could be viewed as marital property. Your spouse could tell the court that they played a role in the expansion of your business. This could also complicate matters.

If you are facing any of these complicated issues, don’t lose hope. If you work with a good lawyer, you may be able to come to an agreement with your spouse.

When a business is viewed as marital property

During a marriage, all assets that you and your spouse accumulate together will be viewed as marital assets. This is the same for your business. If you started your business after you married your spouse, it will be viewed as marital property. All marital assets will be divided between you and your spouse. This means that your business will be divided between you and your spouse.

This is a given unless certain circumstances are in place:

  • You have a prenuptial agreement.

If you have a prenuptial agreement in place that states that all future business generated during your marriage will be viewed as separate, your spouse won’t be able to get anything from your business. There might be some loopholes though, so make sure that you have a great lawyer if you want to save your company.

  • You have a postnuptial agreement in place.

A postnuptial agreement is almost the same as a prenup, but it is an agreement that is done after your marriage. It is important to note, however, that not all postnuptial agreements hold up in court. But it is better than not having anything on paper.

  • You inherited your business.

If you inherited your business it will not be viewed as marital property.

  • Your company is in a trust.

If your business is owned in a trust then it will not be considered marital property.

What next?

As you can see, the way that a divorce will impact your business depends on whether it is viewed as marital property or non-marital property.

This is probably not what you want to hear, but it is really important to have agreements written in place before you get married. If you are starting a business after marriage, it would be wise not to have your spouse work for you because it could put your company at risk if you get divorced.

All is not lost, though, if your business is viewed as marital property. Often times couples can come to an agreement. For example, one spouse could give up another asset, such as the house, in order to keep the business. A lawyer would be able to advise you about the best way to move forward. The court will always try to be fair to both spouses.

Another possibility is that your ex could become a partner in your business, or you might have to give up half of your business in community property. You could also liquidate your company, where both you and your ex get half of the proceeds.

When it comes to getting divorced, your business can be affected. Your ex could end up with a big share in your company, or even owning half of it. Always use a good lawyer when it comes to your divorce and business. This will help to ensure that you can continue to make a great income for many more years to come.

About Business Woman Media

Our women don’t want to settle for anything but the best. They understand that success is a journey involving personal growth, savvy optimism and the tenacity to be the best. We believe in pragmatism, having fun, hard-work and sharing inspiration. LinkedIn

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