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What if your divorce threatens your business?
What if your divorce threatens your business?

What if your divorce threatens your business?

On Behalf of | Apr 3, 2018 | Divorce, Firm News |

Divorce is a far-reaching process that may affect nearly every area of both spouses’ lives, even those that do not seem closely related. This is particularly true when one or both spouses own businesses, which the law treats like marital assets in much the same way it treats real estate or savings accounts as marital assets.

If you face divorce while owning a business, you must address this issue as soon as you can and decide what your priorities are before building your divorce strategy. With some careful planning, you may successfully keep your business intact throughout the divorce, but depending on a number of factors, you may have to sacrifice in other areas to do so.

A carefully planned divorce strategy means understanding the typical ranges of compensation and compromise, where each spouse wins and sacrifices to keep the outcome fair and equitable. If you have concerns about how the divorce may affect your business, be sure to make the business a priority as you build your own strategy.

Is the business marital property?

You may catch a lucky break if you and your spouse chose to address the business with a prenuptial agreement, or if you owned the business prior to the marriage. While many kinds of assets and liabilities join together as marital property when a couple weds, property owned prior to the marriage may remain separate if both spouses agree to keep it that way.

If your spouse helps out with the business, or if some of his or her income gets commingled with business finances, then it is much more difficult to argue that the business is not marital property. In order to keep it separate, it is important to limit your spouse’s involvement and influence on the business.

If your spouse currently works within the business, you must remove them as soon as possible. It is also important to make sure that you pay yourself fairly from the business so that your spouse cannot claim that you are withholding income in the business instead of bringing it back home. Any actions you can take to demonstrate that the business is as separate as possible from your home finances makes it easier to keep it separate during the property settlement segment of your divorce.

What is the value of the business?

If you cannot exempt the business from property division, you may still keep it intact by trading your spouse other assets to equal the their rightful portion of the business’s value. However, in order to do this, it is important to make sure you truly know the value of the business so that you do not overcompensate him or her. This also will make borrowing on the value of the business more streamlined, if that is necessary.

Once you understand the value of the business, it is more possible to negotiate fair terms in your divorce settlement and protect your rights and interests. Be sure to fully address these issues before your head into your divorce to keep your business and you other priorities secure.


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