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Is My Spouse Entitled to Half of My Business?

Is My Spouse Entitled to Half of My Business?

Millions of Americans contemplate and begin the process of divorce each year. Divorce is often one of the most harrowing and stressful situations to face, especially when there are complex assets such as businesses at stake.

Separate Vs. Marital Property

When two people are married, their assets become combined. Therefore, when they divorce, they will need to separate their combined property.

In a North Carolina divorce, property is categorized in two ways - separate and marital. Separate property is any asset that was acquired prior to being married. This also includes inheritances that one spouse receives before or during the marriage. Property that was purchased during the time the couple was married to each other is considered to be marital property.

So anything you owned, including a business that you started before your marriage, is "separate" property. However, if marital assets were used to help grow that business, it could be considered a marital asset and thus be subject to property division.

The Legal Status of Business During Divorce

North Carolina operates as an equitable distribution state. This means the property is divided in a way the court deems is equitable, or fair for each party. Sometimes this means a 50/50 split, but not always.

Sole proprietors and partners often own a considerable portion of their business and have to give half of those holdings to their partner in a divorce. Owners of a stock company have to hand over half of their stock unless they meet some other sort of arrangement with their partner.

The specific mechanics of splitting the business change depending on the levels of involvement of both parties in the divorce and the liquid nature of their assets. In some instances, a business may split off, or one member may take over a particular branch of the company.

Other situations involve one member paying cash or assets to the other member to buy out their stake in the business. Judges and attorneys often come together in order to set up the best possible approach to this problem.

Prenuptial Agreements Can Help

The process of divorce is standardized in most states and jurisdictions. Without prior arrangements, a person may spend millions of dollars in court fees to simply run up against the same agreement to split their assets in half. The most common way of avoiding the situation is through a prenuptial agreement.

These agreements often emerge when one member of the marriage has considerably more assets than the other member. The party with more assets often proposes a contract by which the couple agrees what and how assets will be divided if a divorce occurs. Specifics about a business may easily be included.

Reach Out to a Charlotte Divorce Lawyer

Divorce can be difficult for any couple, even when the members of the marriage have no assets whatsoever. These problems are significantly more complicated if a business is involved. A process that often takes a few weeks can end up taking months or years as the assets and operations of a company are divided. Unfortunately, this can cause problems for a business and may impact its ability to make a profit.

Anyone who is considering going through a divorce and owns their own business needs to consult a Charlotte divorce attorney. Individuals should provide an honest, detailed accounting of their business when they are considering how they should split it up for the divorce proceeding. An accurate appraisal is critical to winning the support of a judge and implementing the approach that an individual believes is the fairest possible approach.

We can aid in determining what parts of the business each member of the marriage should keep. Our Charlotte family law attorneys can also provide a protected line of communication to the other party, and a schedule by which different responsibilities and aspects of the business should be divided. At Rech Law, our team provides clients with sound guidance to help them through the divorce process. We will do everything we can to protect your assets so that you receive your fair share.

If you have any questions about how your divorce could potentially impact your business, contact us today at (704) 659-0007.

 

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