Are You a Business Owner Considering Divorce? Here’s What You Need to Know.

If you own a business, you need to plan very carefully if you want to maintain the value and control of your business during and after a divorce. Your business is an asset, just like cars and bank accounts, and the court will divide it like other assets unless you have made other arrangements. It is a good idea to consult an experienced attorney early on.

The best way to safeguard your business interests is with a pre- or postnuptial agreement, but if it is too late for that, your lawyer will devise other strategies to protect your business and your future.

Equitable Division of Property

Georgia law does not call for an equal division of marital property in divorce—it specifies that property should be divided “equitably.” If a couple can reach an agreement on their own, the court is likely to approve that arrangement. If they cannot, the court will divide property in a way the judge thinks is fair.

The court will look at factors such as how long you were married, the earning potential of each partner, and the reasons the marriage ended. After weighing a variety of issues, then the court will divide up marital property. But separate property will stay with one spouse.

Is the Business Separate or Marital Property?

All property spouses acquire during the marriage—including their earnings—is treated as marital property owned by both. Property that spouses owned before they were married is generally considered to belong to that spouse individually. If you started a business before your marriage or inherited a business during your marriage, it may be considered your own individual property.

However, part of the value of that business could still be treated as marital property. If the value increased during the marriage or your spouse contributed funds or efforts to further the business, then they may be entitled to a share of the value. Suppose you started the business after you were married and you don’t have a nuptial agreement specifying that the property should remain your separate property. In that case, your spouse could receive a substantial share of the business, even if they never helped you run it.

Protect Your Business

One of the most important factors to consider when business owners face divorce is the need to keep the business functioning during divorce proceedings. If uncertainty about ownership or management issues causes the business to halt operations, the value of that business could plummet.

Work with an experienced attorney early on to develop a plan to provide for the continued operation of the business. If you don’t want your spouse to have any connection with the business after the divorce, your plan should also include provisions to buy out your spouse’s interests.

Get Started with a Plan

When you know your goals and your legal standing, then it is time to put together a plan to protect the future of your business during and after a divorce. Tessie D. Edwards & Associates, P.C. can help you claim the full value of any separate property and negotiate to reach your objectives for marital property division. Contact us today to get started. 

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