Divorce and Business AssetsWhen you are going through a divorce and business assets are part of the picture, dividing the marital property becomes more complicated. What you entitled to and what is considered separate property are just a few of the questions that often come up, as outlined below:
Topic: Is he entitled to my business that I acquired before marriage? Angela's Question: We are currently separated and going through a divorce. I came into the marriage with an existing business which continues to run today. During our separation, the business valuation significantly decreased as compared to when we first married. Is there anyway he would be entitled to part of my business? When evaluating a business, is it based on the current years contracts and potential earnings even after the formal separation date? Brette's Answer: Property you owned before you were married is non-marital property and won't be divided when you divorce. However, increase in value of the business that occurred during marriage is likely a marital asset and is subject to division. Businesses are valued based both on current contracts but future potential earnings are also a consideration. » Return to top Would I receive anything from the business if we are partners? Kathleen's Question: My Husband and I own a business together as a 50/50 partnership. I am a full time mom with an Autistic son and 4 year old daughter. Would I receive Alimony or pay from the business? Brette's Answer: There are lots of options. You could continue to own the business together if you both felt that was possible for you. If not, the business is marital property and its value would be part of the property divided. You may be entitled to alimony and definitely child support. You should talk to an attorney who can look at the details of your situation and offer personal advice. » Return to top Topic: Should I wait until his business is established to file? Maggie's Question: My husband has started 2 businesses, neither of which is making a profit yet. My attorney advised me to wait until his income is up before I file for divorce so that I'll be more likely to get more alimony and child support. The problem is that his business is in another state and I have no idea how much he is or will be making. Currently he deposits money into my checking account. But I'm worried that he'll start spending more money on his girlfriend and sending less to his family. How can I find out how much he is making and spending? If he figures out that I'm waiting on filing until he makes more money, he'll have total control and I'm a sitting duck. Brette's Answer: Once you have filed a divorce case or begun mediation, your spouse will be required to truthfully disclose his income. If you seek child support first though, he will need to disclose his income at that point, so you might want to talk to your attorney about filing for child support now. You can also seek spousal support in the meantime if you are concerned that his voluntary payments will end. I think you should ask your attorney how long she is advising you to wait to file for divorce and when based on the circumstances in your case that you would best be served to file. » Return to top Does my husband have any rights to my LLC? Janni's Question: If an LLC is in my name alone but was created while I was married does my spouse have any rights to it and it's assets if we divorce? Brette's Answer: Yes, it is marital property. Good luck. Am I entitled to part of my husband's business? Carolyn's Question: My husband started a corporation after we were married, and now he says that everything in it is his. My name is not on anything. Am I entitled to any of his business in a divorce? Brette's Answer: Yes, a business that is developed during the marriage is definitely a marital asset and its value must be added into the total pot of assets to be divided. You probably aren't entitled to physically own part of the business, but you are entitled to own a portion of its value. Get an attorney and gather as much documentation as you can. Good luck! » Return to top Topic: Can I get a fair shake if my husband has a cash business? Anne's Question: My husband has a business where he receives a lot of cash payments. The house and business are tied up together. I am 62 and this is our only retirement. What in the world can I do to get a fair shake financially. Brette's Answer: You need to get a very good lawyer
who will hire a forensic accountant and track down every single dime. If you
think you can't afford an attorney, ask about the court ordering your spouse to
pay your attorney fees. Topic: What if his name is on the business lease? Dee's Question: We rented a building downtown to open a salon for myself to work out of, and we also purchased all the equipment necessary to run it as well. I would like nothing except for the business to be mine, free and clear of him. Because his name is on the lease, what do I do? Brette's Answer: It seems that you could either sub-let from him or go to the landlord and explain that you need to alter the lease to have your name only. You need to talk to an attorney so that you can be sure you walk away with ownership of the business. » Return to top Are assets bought with proceeds from the sale of his business divisible? Amy's Question: My husband owned a business before we were married. He then sold that business 2 years into the marriage and bought an expensive truck, camper, motorcycle, and paid off the little bit that was left on our home. He states that the assets that he bought with the money from selling the business are PRE-marital property since they were bought with funds made from selling the business. Am I entitled to any of this? Brette's Answer: If the funds are directly traceable to the pre-owned business, they are pre-marital assets. However, if you did anything to support that business and help it grow while you were married then a portion may be considered marital. » Top of Divorce and Business page Are payments for a business taxable if done as a property settlement? Lisa's Question: My husband is getting monthly payments on a business that he sold and has to pay taxes on this. He says that he is willing to give me the monthly payments as part of the property settlement. Will I have to pay taxes on this money? Brette's Answer: You need to consult an attorney to be sure the agreement is structured correctly as a property settlement and not alimony.
Related Articles: Brette Sember is a former family and
matrimonial attorney and mediator, nationally recognized expert, and author of
many books including
The Divorce Organizer & Planner,
No-Fight Divorce, and
How To Parent With Your Ex.
This column provides general information about the various aspects of divorce. It is not intended to take the place of legal counsel and should not be considered personal legal advice. For specific recommendations concerning your situation, please retain experienced legal counsel. WomansDivorce.com and Brette Sember disclaim any liability from any claim arising from any information contained in this column. This column is not a substitute for legal advice. Divorce
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