What Will Happen to My Business if I Get a Divorce?
Running a business or starting a professional practice involves a significant amount of risk, hard work, investment, and commitment. The potential for failure even for those who use the greatest care possible is still high, even once a customer or client base has been established, especially in the event of divorce. In fact, this is a relatively common occurrence, as family businesses and professional practices are often a couple’s most substantial and valuable asset, besides real estate and retirement accounts.
Whether a business will end up being divided or sold off during the property division phase of a divorce depends on a number of factors, including when the business was started, how involved the parties were in running the company, plans for the future, and the parties’ degree of investment in the business. For help evaluating the role that these factors could play in your own divorce, please contact an experienced property division lawyer who is well-versed in state law and can walk you through your legal options.
When Was the Company Started?
One of the most important factors in determining the fate of a business during divorce is when the company or practice was founded. Specifically, courts will want to know how the business was funded, including whether it was founded using separate assets or property belonging only to one spouse, or was started using marital assets. For instance, even when the spouse who founded the company used his or her own income to do so, he or she could still be required to divide up the business if those funds were earned during the marriage. In fact, even if a person started a business long before she got married, she can expect her spouse to have a potential claim on the value of the business if she also continued to invest in the company throughout the course of the marriage, or didn’t keep business finances and household accounts completely separate.
Can You Negotiate with Your Former Spouse?
Even when a company is lucrative, a former spouse may not wish to remain involved in the daily running of the company upon divorce, but may only want a portion of the value it represents. In these cases, it is often in the parties’ best interest to negotiate an agreement in an out-of-court setting, in which the other spouse retains a greater portion of a different asset in exchange for his or her piece of the business.
Couples who are unable to reach such an agreement will ultimately have to put the decision in the hands of a judge who could choose to allocate partial ownership interest to the other spouse, order one spouse to pay ongoing alimony as a way of addressing his or her business ownership, or even sell the company and split the proceeds. Alternatively, couples who aren’t quite ready to file for divorce could enter into a postnuptial agreement that makes the business the sole and separate property of one spouse, while making concessions to the other individual in the event of divorce, thereby avoiding future litigation.
Get Legal Help Today
To speak with experienced Fort Lauderdale property division lawyer Sandra Bonfiglio, P.A. about your own options when dividing the family business, please call our office at 954-945-7591 today.