The longer the marriage, the harder and messier the divorce, experts say.
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The reason why, is that with time we accumulate more and more things, build a life, a house a business.
While you are married it really doesn’t matter who is the actual owner of the business. You might both be working in it and even if you don’t have joint accounts or ownership when it comes to the law – it belongs to both of you equally.
Many people think that the business is not considered matrimonial asset especially if it is a franchise or a company.
But they would be wrong. Even partial ownership is considered matrimonial asset and your soon-to-be-ex might turn out to be an owner in your partnership accounting firm.
Here are the facts and the four main rules that concern your business and your divorce:
- Any property or assets acquired during the marriage are considered matrimonial and are subject to equal distribution between the spouses.
- Any property inherited or received as a gift (by a third party) by one of the spouses remains theirs even after the divorce.
- Any property acquired before the marriage belongs only to the original owner in the way it was reported at the time.
- Any property under a prenuptial agreement is governed by this contract.
Let’s look at a few examples:
1) You own a business that you started before you got married
You owe your spouse equal share of the dollar amount of the business’s growth during the marriage. If the business was worth $500,000 when you got married and is now $600,000, they can claim an equal part of the difference.
2) You signed a prenup with your spouse but after they started their business you worked there for free for years.
You might think that the prenup decides it all but a good lawyer can make claims disregarding the prenup if they can prove that your contribution to the business is what took it so far.
3) Your parents left you the family brick-and-mortar store after they passed away.
The divorce cannot take that away from you. Every inherited or gifted property or asset, no matter in what form, is yours to keep. It won’t be discussed in the legal proceeding for your divorce unless you put your spouse’s name as a co-owner.
4) You own a business and are afraid that divorce might be an option to think about soon. What should you do to protect your business?
The best option you have is to sign a postnuptial agreement. This agreement is signed after the fact of marriage. It can concern any issues you want, including your business. In the postnuptial agreement you can exclude your business of the matrimonial assets and grow it without the fear that it might be taken away from you.
It is a difficult decision to make and even more difficult to enforce.
Most people don’t like prenups and even less postnups. It is up to you to decide what is more important for you and how to go about it.
An experienced family lawyer is your best friend when thinking about divorce and considering how to deal with a business after that. Consult someone you can trust and they will give you specific advice suitable for your situation.
Have you gone through a divorce while owning a business? Do you have any thoughts on the above?