A business can easily be considered a marital asset. As such, if the marriage ends, then the business and its division must also be dealt with. Practically every divorce specialist, such as your local family lawyer or an Australian lawyer similar to Jennifer Croker will likely repeat this to you as well if you do go to consult them. This is because the business, like every other asset/property, must be divided upon divorce.
However, this division is not straightforward. As all professional family law lawyers will tell you, there are a lot of things that must be known when dividing a business, especially if you don’t want to draw the short straw.
As such, let’s take a closer look at the information that is a must for everyone!
Marital Property Laws
While state laws may vary, a couple of factors will always indicate whether a business is a separate or marital property and if it has to be divided.
For example, if you had the business before your marriage and kept it separate from the other marital assets, then it can’t be considered for division during divorce. It can also be kept separate from other assets if you get your partner to sign a pre- or post-nuptial agreement stating so.
Last but not least, LLC or partnership businesses may also be protected during a divorce.
However, if the business was created after you got married, it will most likely have to be divided. The same thing happens if your partner was a significant business contributor or if you merged marital assets with business assets.
Peculiarities of Marital Property Laws
Marital property laws are much more in-depth than pictured above. For example, a business may be owned by a partner before the marriage – but if the business grew exponentially in value during the marriage, it might be considered marital property.
Naturally, this peculiarity is viable only in several states and countries, but not in all.
The state laws also declare how much the spouses should receive in case of a division. As such, community property states come with a 50/50 split. On the other hand, equitable division states come with several factors that will decide how the business will be split.
The former couple may also reach an agreement over the business rights. Namely, one of them can forfeit their rights in favor of other properties or assets.
Last but not least, the division can be avoided altogether. For this, an amicable agreement between the partners is required.
The two will agree to co-own the business after the divorce. In this case, it doesn’t matter if the business is marital or separate property – it must, however, be subject to division.
The two will hold a significant share of the business and will co-own it. As such, market valuation, business division, and many other proceedings will be avoided.
The Bottom Line
The division of business will, in many cases, mean the end of it. Often, the owner is forced to sell it to satisfy their spouse’s share of marital property and assets.
However, division or sale is not always required/mandatory. Obviously, if this can be avoided, then this is the best possible outcome. It is for this very reason that it is essential you contact family law specialists, such as these Solicitors In Mayfair, to help you get the best for yourself and the business throughout the divorce process. If amicable conditions are devised, then the business may even prosper!
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