When a couple gets a divorce, all marital property will be subject to division by the court unless the parties have otherwise been able to agree. This includes any business that one or both spouses owned during the marriage. While an individual may not be required to sell the company or sell assets within the company, each spouse may be entitled to a share of future profits.
It is important to note that a judge will take into account whether or not the business grew substantially while a couple was married. In other words, if one spouse already owned a mature and thriving company prior to the marriage, the other spouse would be entitled to less during the property division process. Business owners who are involved in a divorce are also urged not to hide personal or business assets or attempt to remove their former spouses from the company.
In some cases, this may result in a divorce case being reopened or a court piercing the corporate veil. It will also result in a longer and more expensive divorce proceeding. Once a settlement is reached, it is important to have it approved by the court to ensure that no future claims can be made. Business owners who decide to marry again are advised to consider prenuptial agreements to help protect their assets.
Business owners who are planning to get a divorce may benefit from seeking legal advice as soon as possible. Doing so may make it easier to create a settlement that is reasonable for both parties while also protecting the business going forward. Seeking legal counsel may make it possible to create a reasonable valuation of the company while possibly establishing that most of the company’s growth occurred prior to the marriage.