As a business owner, of course, you want to protect your assets to the best of your ability. However, if you’re going through a divorce, you may be wondering how the proceeding will impact your business. A divorce lawyer can give you a proper direction.
There are going to be special circumstances that apply to you to secure your valuable business assets.
Splitting Assets and Liabilities
When a married couple decides they want to get a divorce, dividing their assets and abilities can get trickier. The court will look at the former spouses’ properties and classify whether they are marital property or separate property. The court will then place a value on the assets, then distribute them between the former spouses accordingly.
Some types of assets and liabilities are more straightforward to divide and distribute than others. A vehicle, for instance, is one good example. In most cases, both spouses have their own car, so they will just keep those, respectively.
However, a marital residence, as another example, is going to be more challenging to distribute.
In the majority of divorce cases, the former spouses agree to sell the marital home and split the payment. In other cases, one of the spouses decides they want to stay in the house and would never want to sell it.
A Divorce Proceeding Will Affect Your Business
A divorce can affect the ownership of your business – especially if it’s a joint business you started with your former spouse. Unless you are amicable, it’s not the ideal situation to end up as business partners with your former spouse.
Another nonideal situation you may have to do is giving up half of your business assets to equitable distribution states, wherein it may not be a fair distribution – primarily if you’ve worked hard to make the business succeed.
Thus, you must take the necessary steps to protect your business, which includes hiring an experienced and trusted divorce attorney.
When you give up half of your business, it may also mean paying the other assets to your former spouse. A good example is couples owning assets such as a marital home, vehicles, even premium valuables such as art or other rare collections.
When you opt not to give up your half business, you have the option of giving your former spouse more of the marital assets. Essentially, you are ensuring that your former spouse doesn’t get ahold of the business you’ve worked hard for.
Differentiate Personal from Business Funds
Texas, which is considered community property, mandates all property accumulated while couples are marriage belongs to them. The court must then divide the property during the divorce.
The financial obligations that result in the divorce, such as child support, spousal support, etc. are calculated based on net salary. If you mix your personal and business income, the divorce can get more complicated.
Divorce Affecting Your Business
Besides hiring an experienced divorce lawyer, you can also benefit from employing an accountant’s services. The accountant will finalize the actual value of your business.
If you established your business before you got married, a divorce would have minimal impact on it – only if it’s clearly defined as your sole and separate property, and not marital property.
The issue always stems from failing to declare business as separate property when the business owner gets married.
If the business grew during the marriage, that growth in value could be classified as a marital property divided between the divorcing couple.
If your former spouse made significant contributions to the growth of your business, then it’s marital property – subject to distribution during the divorce. You can agree to compensate your former spouse for his or her contribution.
The best course of action is to get the legal guidance of a divorce lawyer. It’s essential to keep in mind that business and personal matters don’t mix well. In an ideal world, you are in good terms with your former spouse and can continue being business partners with them.
However, that’s not always the case. Therefore, you must know the steps to take to protect your business. Please reach out to us for essential divorce guidelines to ensure your business is secured.