Divorce is the last thing people are typically thinking of when they get married – however, the sad fact of the matter is that 52% of all first marriages will end in divorce in this day and age. Divorces are already an unfortunate matter but then you add in the fact that a couple has a business, and things become ten times more difficult on top of that. In many cases, a business is one of the most valuable financial assets that one or both involved in the divorce actually own. Countless hours and resources go into them and many people are not prepared to hear that they have put their business at risk in the event of a divorce.
Wanting to Remain Business Partners or Separating the Ties
Despite what many people want to hear, a spouse may be entitled to as much as 50% of a business in the event of a divorce. In most cases, it is safe to assume that you will not want your ex-spouse to remain in your life as a business partner. In other cases, this may not be true.
Some spouses want to remain business partners because of various circumstances. Some think that they can better protect the business if they are still in charge of assets and prepare it for their children’s futures. Some people just want to remain a part of the company that they originally planned on and be part of the operational and financial aspects. Many attorneys will recommend against this only because it is often a very difficult task to maintain a business relationship after a divorce takes place and can be a recipe for disaster. However, with some legal measures in place and agreements/mediation, decisions can be made that revolve around this issue.
The Issues in Determining Entitlement
Property that is acquired during marriage is considered to be marital property regardless of which spouse owns it, and refers to any and all income and assets acquired by either spouse throughout the marriage. Businesses are included in this and a spouse could get 50% of the business once the divorce occurs.
So, how can you try to protect yourself against this? Perhaps one of the most logical ways to go about things could be with a prenuptial or postnuptial agreement. A prenuptial is a contract signed by both parties before their wedding that details what property rights and expectations would be upon divorce that includes full disclosure and the agreement must be in writing. It must be executed by both parties, preferably in front of witnesses. If a prenuptial agreement was not agreed upon before a marriage, a postnuptial agreement may still be in order. It is similar but entered into or signed after the marriage. It should contain the same vital elements as a prenuptial agreement would. These may be a bit trickier because they are usually more often challenged and invalidated more frequently.
It is important, before a marriage, for one to consider the involvement of a married business partner. If a spouse was in any way a contributor to the business, then he or she may be entitled to a substantial part of the business upon divorce. Call our office today at Soheila Azizi & Associates for more information on where to turn if you are in this situation.