Ending a marriage is no minor matter. A divorce impacts all areas of one’s life—not just marital issues. It affects children, assets, employment, and even a person’s business, if they own one.
A divorce can cause a wide range of effects on a business. If you don’t have a prenuptial agreement in place that outlines what will happen in the event of a divorce, you’re in for the fight of your life. While it’s possible that your soon-to-be ex won’t want anything to do with your business, chances are they’re going to want half of it, if it’s marital property.
A divorce can impact your business in many ways, from day-to-day operations to long-term effects. Find out what to expect as you file for divorce.
Can your spouse take part of your business in a divorce? Possibly, if it’s a marital asset. Was the business formed during the marriage? Was it formed before marriage, but marital assets were commingled? Then it is subject to split in a divorce.
However, in order to split your business properly (usually 50/50), then you will need to sell it. That is not a viable option for most people, so the best route is to offer your spouse something else of value, such as more money, a vehicle, or the marital home. That way, the business can be all yours.
What if your spouse decides they want shares of your business? With your spouse becoming an uninvited partner, it impacts other partners you may have in your business. What can your spouse do with these shares? Will this affect the percentage your other partner(s) have in the business? With your spouse owning some of the business, will he or she have a say in operations? How will this affect employees?
Preparing for a divorce is time-consuming. There’s a lot involved, from gathering paperwork to taking calls from lawyers to scheduling court appearances. If you have employees, they may also get pulled into your divorce proceedings. They may be asked questions about the business and be involved in the audit. All these situations take time away from your business operations.
This is not common, but it can happen, especially if your spouse is a business partner. If you don’t have the money to buy out your spouse’s share of the business, then liquidation may be your best bet. This is especially true if your business is getting a bad reputation due to your divorce. It could discourage customers from doing business with you, causing your company’s revenues to suffer.
Assets need to be split in a divorce, and businesses are no exception. Your ex-spouse may end up a co-owner. You may even be forced to sell the business.
The Columbia divorce lawyers at the Law Offices of Todd K. Mohink, P.A. can help you understand the effects of a divorce on your business. Let us help you get a desirable outcome. Get started with a consultation. Fill out the online form or call (410) 774-5987. We have two offices to serve you.
7310 Ritchie Highway, Suite 910
Glen Burnie, MD 21061
30 Corporate Center
10440 Little Patuxent Parkway,
Columbia, MD 21044