One of the first questions that come to the mind of many business owners facing divorce is how it will affect their business. The reality is, this is a very complex matter, and without the right advice, one may end up sharing their hard earned money or partnering up with their ex-spouse in the business.
If you are in this situation, it might be in your best interest to work with a marriage dissolution attorney Columbus Ohio. They are better placed to help you protect your business and even get the best possible outcome in your divorce. But to help point you in the right direction, here are some insights on how a divorce may affect your business.
In general, every asset that both you and your spouse acquire while in marriage is a marital estate, meaning, it will be split between the two of you. If you started your business while you were in marriage, it’s likely to be termed as marital property. However, there are exceptions.
This is where you have an agreement which indicates that all businesses, current, and future, as separate property. A prenuptial agreement is a contract that you sign before going into marriage, while a postnuptial agreement is one that you sign while in marriage. The latter is usually subject to lots of, but it’s better than having nothing at all.
If it was inherited
If you acquired the business from someone else as an inheritance, it might not be considered marital estate, but if it grows during the marriage, it can be included in marital property.
If you place it in a trust
A business that’s in a trust won’t be considered a marital property
Your business will be regarded as non-marital if it started before the marriage; you inherited it, or you have a pre- or postnuptial agreement in place.
A business will be considered separate asset if your ex has no interest in the company – unless you transferred some interest to them during the marriage, or if you expand or grow your business while in marriage. In the case of the latter, the court may look into the money you used to expand your business, and if it’s from your marital property, then that part may be considered marital property.
There is a possibility of ending up in business partnership with your ex. Of course, this is the last situation that you would wish to find yourself in but can happen, especially if you didn’t take any necessary measures to protect your business in the event of a divorce. In this case, you may be forced to give up 50% in marital property or the same amount in equitable distribution asset
In the event you have to share a percentage of your business, you can choose to give up other assets like stocks, bank accounts, home, cars among other things so that your business can remain intact. Better yet, you can liquidate your business and divide the proceeds with your soon-to-be-ex. And although this is usually the last resolution, it may still be the only solution that works.