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Expert Answers to Biz Questions Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
Divorce and Business Assets – Dividing a Business in a Divorce
Being a business owner is quite difficult, especially given the current world situation. However, being a business owner and going through a divorce is difficult and very stressful!
If you don't know the ins and outs of family law, there's a chance that you'll be left without parts of your business. At the same time, people on the other side of the divorce who don't have professional family law attorneys by their side might miss some significant benefits.
Given the above, let's look at how the division of a business and its assets occurs during divorce!
Marital Property or Separate Asset?The first thing to determine is whether the business itself is marital property or a separate asset belonging to one spouse. The trick here is that some states come with different laws regarding this matter, and you should inform yourself before assuming what type of property the business is.
The points above imply that the business won't be divided during a divorce, and the initial owner will retain full ownership over its assets and so on.
When is a Business and Its Assets Divided?Once again, depending on the state, a business will get divided if:
In case one of the above happens, then the business will be considered overall marital property. For example, if your spouse brings contributions to one of the business' parts/sectors – branding - they are not entitled only to that part or to its value.
Once the business becomes a marital asset, the other spouse is pretty much entitled to the same value/share as the business owner.
The Bottom LineIn the end, if the business is kept separate from your marital assets, then your wife or husband does not have any claim on it. There are also some interesting peculiarities.
For example, if you inherit the business while you are married, it will not be considered marital property. Given this, it is always better if you have a professional family law attorney with you, as they can tell you exactly what to do to prevent your business from being damaged!
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