Figuring out what to do with a family business in a divorce can be complicated. It’s prudent to have plans in place for your business before the idea of divorce is even on the table. That way, you can be clear on what steps to take if life leads you down that path. When it comes to divorce and family business, protecting your investments is essential.
Divorces can be complicated legal matters. When it comes to dividing property and debts, the situation can get all the more convoluted. Working with a divorce lawyer can help you ease through the process, especially if you work with a professional who has experience handling family business affairs. Regardless of your next move, it’s beneficial to understand how a divorce can impact your ownership of a family business.
Divorce and Family Businesses
Family businesses contribute significantly to the overall economy, making up a large percentage of the gross domestic product in the United States. Across the country, thousands of new small businesses are established each year, and many of them are family-run. While operating a family business can be both rewarding and meaningful, it can also create complex challenges, especially in the event of a divorce.
Divorce rates vary by region, but separation is a reality for many couples nationwide. When a divorce involves substantial assets, such as ownership in a family business, proper planning and legal guidance are critical.
In most jurisdictions, the divorce process typically begins with filing and serving a petition, followed by the other party’s response. The process often involves the exchange of financial information and the completion of court-required documentation. Some areas may also require a period of separation before a divorce can be finalized.
How To Maintain Ownership of a Family Business in a Divorce
If you believe you have a rightful claim to a family business, there are several steps you can take to protect your interests:
- Clear definitions of property: In many states, marital property is subject to equitable distribution, while separate property, such as a business owned before marriage, may be excluded. Accurate classification of business interests can be essential during property division.
- Marital agreements: Tools like prenuptial agreements, postnuptial agreements, and buy-sell agreements can help safeguard business ownership by outlining each party’s rights and responsibilities in advance.
- Proper business planning: When starting a business, it’s important to formalize ownership, clarify roles, and establish clear goals. This can help reduce disputes later.
- Separate business finances: Keeping personal and business finances distinct can make it easier to prove the source of funding and determine whether business assets are marital or separate property.
No matter the details of your divorce, it’s wise to consult with a divorce lawyer to help you through the process. Navigating a divorce on its own can be challenging and tiresome, and determining how to dive into a family business can add more complications to the process. It can be helpful to have access to a legal professional who understands how to navigate these types of cases.
FAQs
Q: Is My Ex-Wife Entitled to My Investments?
A: Your ex-wife may be entitled to your investments. When you go through a divorce, you can expect all marital property to be divided equitably between the two parties. However, your spouse is not entitled to any property you owned before the marriage or after legal separation.
Q: How Can I Protect My Investments From Divorce?
A: You can protect your investments from divorce by establishing clear ownership of the assets during the marriage so you can prove they were not purchased together with your spouse. While spouses are expected to split marital property equitably during a divorce, they don’t have to divide all their property. You can also look into using a prenuptial agreement, postnuptial agreement, buy-sell agreement, or trust to further protect your assets.
Q: Do I Need to Work With a Divorce Attorney?
A: You’re not legally required to work with a divorce attorney, but it is highly recommended in most cases. This is especially true if you have complex arrangements to make, like splitting a business you own together. A divorce lawyer can guide you through any challenges with the divorce process and help you make decisions that secure your future.
Q: How Do I Protect My Business in the Case of a Divorce?
A: You can protect your business in the case of a divorce through proper planning. You can keep your ownership over a family business safe by establishing clear instructions for what’s to happen in the case of a divorce. Both prenuptial agreements and postnuptial agreements can help you outline procedures for asset division. Protecting your business during a divorce involves some foresight on your end.
Discuss Your Case in Detail With a Divorce Lawyer Today
If you’re going through a divorce and have concerns about where your family business stands, it’s a good idea to connect with a family attorney to better understand all your options. A skilled legal professional can help you figure out how to move forward with your divorce while protecting your interests and securing a fair outcome.
At Stange Law Firm, we have experience navigating all types of divorces, so we’re used to adapting to unique situations that require dedicated care. Don’t leave the fate of your business up in the air. Get in touch with our team to set up a consultation and talk about your case in more detail today.
