As the saying goes, what’s mine is yours. When a couple unites through marriage, it is often the case that spouses share everything in their union. This means that the property of one spouse is likely to be considered the property of both spouses. How property is treated is dependent on the state that the couple resides. As such, when a couple divorces in Ohio and elsewhere, state laws dictate how property is divided among spouses. While some items and assets may seem minor, other can be major assets that cause complex legal issues. When a business is involved, this could present challenges in the property division process.
Divorcing a business
Untangling business finances while dividing marital assets can be complex, emotional and taxing. When a couple is not only connected through their union but also through a business partnership, this could lead to a lengthy divorce with numerous decisions that are often contentious. Additionally, divorce could be very disruptive to the business, and having a business appraised can be an intrusive process.
Even when one spouse owns or co-owns a business, the other spouse is typically entitled to a portion of the ownership interest. This is based on the other spouse’s efforts working for the business or contributions towards the operation of the business. This can either be direct, such as providing a down payment, or indirect, such as managing the family while the other worked at the business.
Lessen the impact on a business
When a business is started during a marriage or one spouse enters the union with the business already flourishing, it is helpful to put a marital agreement in place. This helps address how the business will be handled in the event of a divorce. If a prenuptial or postnuptial agreement is not in place, it is still possible to minimize the impact of a divorce on a business. This includes keeping detailed business records, keeping business and personal expenses separate, assessing wages and not relying on unreported cash from the business to support a lifestyle that exceeds one’s reported income.
The division of marital asset is a necessary step in a dissolution. While this could be outlined in a marital document, such as a prenuptial or postnuptial agreement, other spouses may face this portion of the divorce process without a document that outlines the division of property. If a divorcing spouse is facing challenges, especially when a business is involved, it is important that they are aware of their options and rights when it comes to moving forward with property division.
