Divorce can be a complicated process involving lots of stress and painful moments, but if you and your spouse own a business together that will mean it won’t be simple. A North Carolina family law attorney can help you sort out the situation and ensure you are treated fairly in the divorce.
A business is defined as an asset in a divorce. You don’t want to lose what you’ve worked so hard for just because you end your marriage.
Understanding Business Assets in Divorce
A business asset is anything that creates value and can easily be converted to cash. For instance, you own a copy store. All your copy machines are business assets. Here are examples of other types of business assets:
- The building where your business is located
- Machines used in your business
- Computers
- Vehicles
Those are all tangible assets. However, it gets tricky when you discuss intangible assets. An example of an intangible asset would be your customers’ goodwill. Does your business have a good reputation in the community? It’s difficult to measure that.
Timing Matters
It’s critical to understand when the business was started. If your wife starts a business before the marriage and she operates it without your help, she will likely keep it in the divorce. However, if she comes into the marriage with it and then you invest in it, that complicates things. If the two of you start the business together, then it’s going to have an impact on the divorce because the business will be considered “marital property.” If you want to keep the business going after the divorce, the judge may ask you to step aside from running it day to day, but award you something else, like stock. The laws on this vary from state to state.
Potential Complications in Business Division During a Divorce
Marital assets have to be divided when you divorce. Your attorney may advise you to have a valuation done on your business, which can be expensive—as much as $20,000. However, it may be critical to ensure a fair division.
How the judge decides to value your business and divide business operations, and continuity will be affected. Shutting down the business while it’s all sorted out may cause a financial crisis. There are alternatives.
Protections for Business Assets in a Divorce
There are several ways to protect your business assets in a divorce. You may buy out your spouse. The business may be split into two businesses. Here are a few more:
- Pre-nuptial and post-nuptial agreements
- Trusts and other legal vehicles
- Keeping business and personal assets separate
You will need the help of an attorney to draw up the agreement or the trust. An attorney will be able to minimize complications and optimize protections. If you are about to seek a divorce, our attorneys bring not only legal expertise but business acumen to the table, and you should call us today for a consultation.
