In many divorce proceedings both spouses agree: divorce is in their best interest; yet, in a majority of separations, the spouses will go to court over the financial division of their assets. Unfortunately, many people are unaware of how asset division will impact business ownership after a divorce.
At Wisselman, Harounian & Associates, we believe expert representation begins with educating our clients about divorce proceedings. For this reason, we are going to talk about business ownership and divorce.
When one or both of the spouses owns a business, a division of assets can get a little tricky. The first thing to determine is if one or both of the spouses holds legal ownership. When a couple gets married, the assets they owned before the marriage can become joint assets in the eyes of the law in a variety of ways.
If someone enters a marriage owning a small business, and his or her spouse or partner contributes money/resources to that small business, he or she will own a portion of the business to the extent of his or her contributions. However, if someone enters a marriage owning a small business, and their spouse never contributes to that business (physically or financially), the owner is likely to hold sole ownership of the business after the divorce.
Additionally, your spouse may not own a portion of the business if he or she signed a prenuptial or postnuptial agreement concerning the ownership of the business. However, if one spouse hires the other spouse as an employee, and he or she plays a pivotal role in the business's growth and success, he or she can claim part ownership of the business.
Options for Business Ownership after Divorce
If a divorce court finds that both spouses have a claim to a business, there are three ways the situation can play out:
- Both spouses continue to run the business together despite their divorce (good luck with that!)
- The couple goes to court and “separates” the business.
- One spouse buys out the other spouse’s claim to the business.
Regardless of the outcome of business ownership in a divorce, making the best case for ownership takes an experienced family law firm. Wisselman, Harounian & Associates has 150 years of collective experience in divorce and family law. We can help you establish your claim to your business!
Thinking about divorce? Call (516) 406-8500 now for a free consultation regarding your case!