When people get married, they never expect for anything to go wrong – especially when they have built a great life and obtained many assets together. However, sometimes the inevitable happens and then a couple must ask themselves, “How do we divide these assets? Where do we turn?” Since many people own businesses, it is only common sense that businesses will also be left at the center of divorces as well. Owning a business can make a divorce unique, but usually in negative ways. It is a difficult task to figure out how a business will be divided when marriage did not work out.
Too few people fail to see that they are doing things that could put their business at risk during the divorce process. However, if more people realized that they stand a real chance of keeping their business and continuing to help it grow, they may make different decisions along the way. You may be upset to know that your spouse may actually be entitled to as much as 50% of your business in a divorce, which is why protection is your best bet. However, this also means that you must be proactive. The only way that you can protect your business to the best of your ability is by taking protective matters before the thought of divorce actually runs across your mind. Transfers to irrevocable trusts must be done years in advance and prenuptial agreements can be considered as well.
Understanding Separate and Marital Property
Separate property includes property that was obtained prior to the marriage, inheritance belonging to one spouse, and gifts received by one spouse from a third party. By keeping a spouse from signing as co-owner, you are protecting your assets essentially. Now that you understand separate property, what is marital property? This is property that acts just as the name says, and was obtained during the marriage. This, of course, also includes all income and assets acquired by either spouse during the marriage such as retirement plan money and commissions from work.
Prenuptial Agreements: The Best Idea?
Prenuptial agreements are one of the best and least expensive ways to protect your business if you are in the midst of a divorce; however, as stated prior, they must be done in advance as a proactive matter. A prenup is an agreement that both parties sign before their wedding. They detail property rights and expectations that will come into play in the unfortunate event of a divorce. However, the process may be a bit tricky because many aspects must be considered. The agreement must be executed voluntarily, must be in full disclosure without hiding assets, and be executed by both parties in front of witnesses. Whatever is considered to be marital property will be considered as such at the time of a divorce. This is one way that you can protect your business, and probably the best as well as easiest if possible.
Another way to handle this scenario is to buy the business, if possible. Yes, this may seem a bit like “buying off” your spouse, but it may be the best way to obtain what you want the most. You may be able to use your marital assets including cash, stocks, and more to pay for the business if you do not want to end up as business partners in the long run. You may also choose to just sell the business and divide the sales price.
In the end, you should know that you have very real choices to make. This is why it is in your best interest to never handle these cases yourself, but speak to an attorney who has experience in this line of work. Call The Law Offices of Amy M. Montes for more information.
