Your business is more than just a job and much more than a regular financial asset. Yet divorce laws can treat your business as if it has no more meaning and complexity than a savings account. To protect your interests and all that you’ve worked so hard to achieve, you need to anticipate and prepare for the extra decisions and steps needed to handle your business in divorce.
It is very helpful to work with a divorce attorney experienced with protecting interests in a closely-held business. Here are some factors to consider during the divorce process.
Your Business Will Probably Be Treated as Marital Property
When a couple divorces in Massachusetts, their marital property is divided up according to “equitable” principles. This could result in an even split, but equitable means “fair” rather than “equal” so if a judge feels that one party deserves a greater share of marital assets than the other, then the division will not be completely equal.
If you entered a prenuptial agreement specifying that one partner’s business interests would remain their separate property, then the business will probably not be divided in divorce. However, if not, the business will be divided like other jointly owned property, even if only one partner worked on the business. After all, the wages one spouse earns during a marriage are all considered marital property.
If one partner owned a business before the marriage, then a court might decide that the other partner is entitled to only a partial interest in the business, depending on how much that partner contributed in effort or resources. Even if the other partner did nothing at all to support the business, however, the fact that they maintained the home or worked another job could be seen as providing support to the business owner so that it would only be fair to grant them some share in the business. Make sure your attorney has all the facts to make the best argument supporting your position when it comes to dividing up interests in the business.
What are Your Goals for the Future of the Business?
You will need to consider your goals and balance those goals with the realities of the situation. If you want to continue operating the business without your former spouse having any interest, then you must develop a plan to buy out that partner’s interests with other assets.
In some cases, it makes more sense to sell both partners’ interests in a business and move on to a new venture. So many factors go into this decision that you will need to allow considerable time to gather information and weigh options before finding the right choice for your situation. You should consider consulting financial professionals, including those with expertise in business valuation.
Take Steps to Maintain the Value of the Business
During the divorce process, uncertainty and distraction can cause your business operations to suffer. Be sure to put measures in place to keep the business stable so that it will continue to be profitable. Whether you plan to sell or continue running the business, you only harm your own interests if your customer service or quality start to decline and your reputation suffers.
Work with a Divorce Lawyer Prepared to Protect Your Business Interests
Many factors can make a divorce complex, but divorces involving a business are probably the most challenging. You worked hard to build your business, so you deserve to work with a legal advisor who understands how to best protect your interests in that business.
At Koiles Pratt Family Law Group, we have extensive experience guiding business owners through the divorce process to a better life ahead. Contact us today to learn how we can help in your case.