Divide Your Small Business in a Divorce: What You Need to Know
It can be tremendously rewarding to build a business with your spouse, but it can also be devastating if you are going through a divorce. Small business owners must carefully assess their financial condition to determine how their business can be divided and what options are available, unlike many couples who simply have to worry about splitting up a household.
Depending on your business, there can be different possibilities since not every approach will work for every divorce. Your best action is to speak with a divorce lawyer in Andover, MA, about the situation.
What Constitutes a Marital Asset?
According to Massachusetts divorce rules, unless they are divided in a pre-or post-nuptial agreement or if you brought the assets into the marriage, all assets acquired during a marriage are by default regarded as marital assets. This means that even if your spouse has no involvement in a firm you created during your marriage, your interest in it is still regarded as a marital asset. This implies that the firm might be subject to equitable distribution in a Massachusetts divorce. Of course, your spouse would have a bigger share in the company if you established it together.
These arrangements, whether pre- or post-nuptial, can assist in separating your business from your marital assets. These agreements typically offer small business owners legal safeguards after a divorce, while the courts may still carefully scrutinise them and deliberate over their legitimacy. If you have one, you should speak with a lawyer right once to find out if it will prevent your company from being divided in the event of a divorce.
Methods for Dividing a Business
There are typically four ways to divide a corporation during a divorce:
- The hardest part for you may be selling the firm and dividing the assets, although doing so might be easier if you sell the company for its total value.
- Buy your ex out: Alternatively, you could need to buy your ex out of the company if you want to keep it.
- Sell your share: The alternative situation is also a possibility. Perhaps you are prepared to launch a different company or enter a foreign market.
- Share the business: Although it is frequently the most challenging option, some divorcees may choose to share the business. Legal contracts specify who oversees what aspects of the company or the regions you both intend to operate.