Every divorce comes with a degree of risk and various challenges. Spouses may find themselves arguing about custody matters and property division. Even whether or not the divorce is necessary can be a point of contention in some cases.
Certain personal characteristics often contribute to the complexity of a divorce. Being a business owner can easily complicate divorce proceedings. Typically, business owners want to protect their organizations when they divorce. They may require support as they prepare for divorce to ensure that they achieve their goals.
What issues frequently arise during divorce proceedings when one spouse owns a business?
Determining how much equity is marital
Sometimes, the business owners started or acquired the company during the marriage. It is therefore very clear that the entirety of the business’s value is part of the marital estate. Other times, they may have inherited the company or owned it prior to marriage. Both of those scenarios could make an asset separate property. However, investing in a business during marriage can constitute commingling and raise questions about the other spouse’s interest in its equity. Determining what the company is worth and how much equity the spouses have to divide can be a challenging process.
Handling spousal employment
Frequently, people employ their spouses and other family members at their businesses. It can be very difficult to work with a spouse during or after a divorce. The business owner either needs to negotiate an airtight employment contract to protect themselves from liability and the risk of future litigation, or they need to help their spouse transition to a new position elsewhere. Both arrangements typically require careful consideration and regular communication between the spouses.
Addressing support issues
Both child support and alimony or spousal support obligations depend in part on the income of the spouses. Business owners may not have predictable income, especially if their company provides seasonal services. For example, accountants often see demand for their services surge in late March and early April and may only have a minimum amount of client activity outside of tax season. Determining support obligations can be somewhat challenging for business owners as they prepare for divorce.
Having appropriate guidance and insight into state regulations can help spouses push for a reasonable divorce outcome. Business owners often require assistance when they decide to divorce, and that’s okay.