Getting a business off the ground can be extremely challenging, especially in this economy. Starting and maintaining a successful business typically requires a significant capital investment, a fully thought-out business plan, and years of hard work and dedication.
If you and your spouse decide to get a divorce, protecting your business may be one of your priorities during the divorce process. Courts will evaluate the answers to the following questions when determining how to divide your business:
- Is there a prenup? A prenup can often specify how to divide business assets in the event of a divorce.
- When did you start your business? Businesses started before the marriage may be considered separate property.
- Did your spouse contribute to the business? If your spouse did not help maintain or expand your business, they are less likely to be granted interest in the business.
- Were marital funds spent on the business? In Ohio, an equitable distribution state, the court will distribute all your marital assets in a ‘fair and equitable’ manner. Before beginning the distribution process, the court will need to determine which assets are marital assets, or assets that were acquired during the marriage or improved upon with marital funds. Other assets, including assets you brought into the marriage, will typically be classified as separate property and are not subject to division. If you kept your business separate from the marriage and did not use marital funds to maintain or expand your business, it is unlikely that the court will classify your business a marital asset.
- Did you receive a salary? If you paid yourself a competitive salary and did not simply invest all profits back into your business, your spouse cannot argue that your income did not contribute to the household.
The division of assets in a divorce proceeding can be extremely complex, especially if you own high-value marital property. Your business can be one of your most valuable assets. A family law attorney can help protect your interest in the business you worked so hard to establish.