You are a hard working mum – both at home and out of it, and you have not only taken great care of your kids but of your business as well.
You have built a company you are proud of and now all of that is in danger because of your divorce. Or is it?
You might be a business owner or the spouse of a business owner – it doesn’t matter. It is always good to be informed as to…
What happens to a business after a divorce?
If you don’t own the business, but your spouse does, you need to be even better informed about the after-divorce rights you will have.
In short – a business is a marital asset and after the divorce it will be split 50/50 between the spouses like everything else.
However, there are a few exceptions and they are very important if you are going to start a business after you are married, or get married after you start the business.
Nobody wants to plan for divorce but when it comes to business, better to be prepared than to be surprised.
So when is a spouse not entitled to 50% of the business?
1) There is a prenuptial agreement.
In that case it is quite clear what happens – during the divorce, marital property will be divided according to the agreement.
Prenuptial agreements are quite flexible and if you have one, you need to refer to it together with your lawyer to find out what happens to your business after the divorce.
2) The business is an inheritance or gift (from a third party).
In that case it is not considered a marital asset.
If you received a store as an inheritance from your parents and are divorcing, you don’t need to worry – it is all yours and you don’t need to share it with your spouse (unless you put their name as a co-owner as well).
3) Partnership or company agreements
There are specific clauses in partnership or company agreements that can hinder (or at least limit) the transfer of business property to a spouse after a divorce.
For more details and options, it is best to consult your business partners and a trusted lawyer to discuss the issue.
4) There is a postnuptial agreement.
This is just like the prenup but after the fact.
The spouses can sign an agreement that the business will not be considered a marital asset in the case of a divorce. This agreement can be reviewed by your business lawyer and once signed is binding for both parties. This is a smart way to separate assets in order to protect the business.
As you can see there isn’t a single answer to the issues regarding your business and divorce.
The divorce process is complicated even without the additional stress of deciding the fate of your business. However, there is something that can make it a lot easier and it is having an experienced lawyer on your side.
They can lead you not only through the divorce process but make sure your business is protected along the way.