Ending a marriage is a difficult process that can be made more complicated when complex assets are involved in the division of the parties’ property. For example, when one of the parties to a divorce owns and operates their own business, questions may arise regarding if that business should be viewed as separate or martial property. This post will address the benefits of having a contract in place that explains how a business should be divided during a divorce, but how the matter may also be handled if such an agreement does not exist.
Partners to marriages can address the ownership and disposition of businesses in premarital agreements and post-marital agreements. In such agreements, the parties can stipulate that a business shall remain the separate property of one of them, and they may also address how any earnings or gains should be divided. Having an agreement in place can reduce much of the confusion of how to deal with business divisions during divorces.
However, not all couples anticipate starting their own businesses and many elect not to create contracts that discuss their businesses’ ownership. When a business is not covered by a marital contract, a court may look at how the business is run, how it is funded and how its assets are separated or comingled with the general assets of the couple to decide who should own it after a divorce.
The legal and financial topics addressed in this post are not offered as any form of advice. Individuals who are concerned about the treatment of their businesses and other assets during their divorces should seek professional help to ensure that their wealth is protected and their rights guarded.