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6 Things You Should Know About Divorce and Business
Starting a business nowadays is one of the best ways to bring some income to your family, without going for a 9-to-5 job. Considering that there are a total of 5.5 million family businesses in the United States, many people decide that working with their significant other is the way to go. If they have a long and happy married life, that business will go into generations.
The problem is that if the marriage starts to shake, so will the business. Unless the marriage ends in very amicable terms, the partners will not be able to run the business as before. Even if it was amicable, some things may still change. If you are planning to run a business with your spouse or foresee a divorce, here are some things you may want to be aware of.
1. Prenups are Very Useful
When you are married and own a family business, your spouse is entitled to a part of it, whether or not they are co-owners. An ex-spouse may seek money from the other partner years after a marriage ends, so long as they find a loophole. It’s rare, but it can happen.
Prenups can help protect your business, especially if you started as a separate entity or you had it before you got married. The only catch is that you need to sign this document at least 28 days before you get married. Once you get married, you may still get a postnup, but it may not hold as much value in court as a prenup.
2. Mediation Could Help Bring Best Results
When you get divorced, you will likely find it difficult to be in the same room as your ex, let alone negotiate with them. Because of your conflicts, you may as well spend days, even months arguing, without coming to a conclusion. To get back to your business as soon as possible, you may want to try mediation. This will help you choose which asset holds the most value for you.
3. There Is a Time Limit
If you just divorced your spouse, there is usually a time limit during which you can claim your settlement. In the case of married business owners that get separated, that time limit is one year. You may apply for an extension going through hardships, but it gets significantly more difficult as time passes.
This is why it is recommended to claim your settlement as soon as you get over the divorce. Otherwise, you may end up losing the amount you are entitled to.
4. Understand that It Will Be Emotional
When you own a business with your spouse, and you both end up getting a divorce, you need to be prepared for the roller-coaster of feelings waiting ahead of you. Your business is like your baby, and you will likely feel the same things you would feel when trying to share custody.
If you both decide to keep shares of the business, you need to learn how to keep your feelings in control. Otherwise, your feelings and disagreements can end up being the downfall of your business. Perhaps some therapy sessions can help you come to terms enough to keep your business going.
5. The 50/50 Division Doesn’t Always Apply
Many may think that 50/50 distribution automatically applies when you get a divorce, but that is not always true. Various factors are taken into consideration here, such as the involvement, the length of the relationship, and more.
The future needs of the other party are also considered when determining how the division is done. For instance, if the divorce caused the other person significant financial needs, they may receive a chunk of your business so that they may still receive income. On the other hand, if they are the ones who mostly ran the business and you only chipped in now and again, you will not receive half of the business in return.
6. A Lawyer Can Be Very Helpful
Very often, couples going through a divorce refrain from hiring a lawyer, in an attempt to save a few dollars. However, in states such as Colorado, only a local lawyer may be able to win your case. A Denver family lawyer, for instance, will know all the technicalities of business division and fairly help you through the process.
The Bottom Line
Divorce is never pleasant, especially where assets are involved. If you have a business with your ex, choosing a good lawyer can help you get the most out of the divorce. This way, you can get on with your life and start anew.
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DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.
TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.