If a divorce is in your future and you are a business owner, then you are probably worried about the future of your business, as you should be.
Typically, a business is considered an asset, just like a car, a house or a retirement account. However, that doesn’t necessarily mean that your business will be divided in your divorce.
The first step in determining if your spouse has an interest in your business is figuring out if the business is considered a marital asset.
Marital assets are all property that is acquired by either party during the duration of the marriage. Therefore, if you started or purchased your business before getting married, then it may not be marital property and, therefore, may not be subject to division in your divorce.
On the other hand, if you started or purchased your business during your marriage, then it is likely martial property and your spouse is likely entitled to a share of it.
Of course, like most legal issues, the situation is rarely black and white. In many cases, it can be difficult to determine whether a business is marital property. More complicated scenarios include:
- You started/purchased your business before the marriage but the business expanded during the marriage
- You used marital funds to invest in the business
- You started/purchased your business during the marriage, but you used an inheritance to do so
- The business is non-martial, but you transferred a share of the business to your spouse
- The business is non-marital, but you take compensation or earnings from the business
Any of these factors can cause a business to be both marital and non-marital in nature.
The bottom line is that asset division needs to be handled carefully during a divorce, especially if a business is involved. It’s important to work with a divorce lawyer who has a business background and can help make sure that your business is protected during the divorce process.