When one or both spouses own a business, asset division can get exceptionally complicated during a divorce. While dealing with business issues can seem daunting, there are several options couples have for dividing all assets fairly, including for business.
Divorcing couples will want to enlist the help of a divorce attorney and a financial advisor to come up with practical solutions and to protect personal property such as your business.
Our firm handles cases with asset division involving businesses on a regular basis. Many clients come to us with a lot of false preconceived notions about dividing a business in divorce. Below are three of the most common misconceptions people have, and the truth of each matter.
Myth #1: A Prenuptial Agreement Completes Protects Your Business
If you started a business prior to your marriage and have listed the business as separate personal property in your prenuptial agreement, your stake in the company is protected but only to a certain degree.
Whatever time, energy, and marital funds you or your spouse has spent on your business during your marriage can affect the property division. These contributions add value to your business. If your spouse’s contributions caused an increase in value the business, it’s quite likely that a portion of the value of that increase belongs to him/her.
Myth #2: One Spouse Must Buy the Other Out
One spouse does not have to necessarily buy the other one out although this is one common way divorcing couples handle the business division. If the company or part of the company is considered marital property, there are several other ways you can control the division. For example, the business can be sold and then divided accordingly.
Another option would be for both parties to remain joint owners and continue their business partnership. Joint ownership is rare but does work for some couples that make better business than romantic partners.
Myth #3: It Makes No Difference When the Business Was Started
When you opened, the business makes a world of difference to the legal system. If your spouse began the enterprise prior to your marriage, you will likely not be entitled to any of the value of the organization up until the date of your marriage.
Likewise, if the company was started after your wedding and was opened with marital funds (as opposed to your spouse’s personal funds, for example, inheritance or gift) or you made significant contributions to the business, it will most likely be considered marital property, and thus subject to asset division.
Hiring a Lawyer to Assist with Your Asset Division
Consulting a legal professional is the best way to come up with solutions that work for your situation. For help with your divorce in Washington, contact the Law Offices of Molly B. Kenny at 425-460-0550 and schedule a consultation.