Starting your own business can be one of the most exciting and rewarding experiences of your life. The company often represents your blood and sweat from years of hard work. After spending so much time focused on succeeding, worrying about every dime and customer, it can be frightening to think how a divorce might interrupt or even jeopardize all your efforts. In addition to the tips included in this article, seeking the advice of experienced family lawyers is always a good idea.
Here are a few key tips to remember if you own a business and are considering divorce.
- The Business Is A Marital Asset: You might be familiar with a concept called “community property” which means that all property acquired during a marriage belongs to the marital community, ie; you AND your spouse. You may say, “but what if my spouse did nothing to contribute to the business” or “he/she was never involved and doesn’t even know how the business operates”. All that may be true, but in the end, if the business was created, or even just grown, during the marriage it belongs wholly or partially to the other spouse.
What does that mean? Will a judge order the business liquidated just to split the value between the parties? Not necessarily. The court is interested in an equitable division of the assets, and that leaves plenty of wiggle room for what a judge may order. For example, continuing to run the business may be the only way to properly divide its worth between the parties. A payout over time to one spouse is a commonly used device. Or, re-financing may be the best course of action, where a spouse uses a bank loan to “buy-out” a spouse and therefore retain control and ownership over the business.
The key point here is that there are many viable options to choose from when it comes to dividing a business in a divorce, most importantly is choosing a family lawyer that will be able to help you navigate these issues.