Questions that Divorcing Business Owners Should Ask
Jan. 11, 2019
Asset division in divorce can become complicated when business ownership is involved. Here are some questions that you may be asking yourself about your business assets. It is prudent to find the answers to these questions to begin to determine your businesses’ status after a divorce.
Does It Qualify As Marital Property?
One of the first questions to ask when evaluating assets for division is if the business qualifies as marital property. Some of the questions to determine if it is separate or community property are:
Did one spouse own it before the marriage?
Was it inherited or gifted to one spouse?
Do both spouses contribute to the operation and support of the business?
If the answer to one of the first or second question is yes and the answer to the third question is no, your company may not be marital property.
Is The Business Held Separately?
Is there a pre-marital agreement that addresses what the status of the business will be in the event of a divorce? If the document states that one spouse will retain full ownership of the enterprise in the event of marital dissolution, it will likely stay out of consideration for a division of assets.
Why Is Professional Valuation Necessary?
Accurate valuation of assets and debts is essential to get the clearest picture of what can be negotiated in a divorce settlement. If your business is a marital asset, proper expert valuation of your company can provide useful information to use when bargaining for an equitable division of your total financial situation.
Division Or Solidification?
Did both spouses work in the business? If only one spouse worked in the business, it is possible that the involved spouse would want to buy out the other spouse’s share of business assets to retain the business. In other cases, they may want to sell the business and split the proceeds, especially if the involved spouse does not rely on the company for supportive income.
A consult with a family law professional can begin to provide answers about your particular divorce situation. The more that you are aware of the facts concerning your circumstances the better you can plan for your future.