As a business owner, an impending divorce can complicate your day-to-day operations. When you share business ownership or operation with your spouse, this ownership can become even more complicated. Our asset division attorneys at Sherwood, Johnson & Poles share what business owners should expect when divorcing.
Your Business Will Be Evaluated In the Division of Assets
As a major asset, your business will need to be included in the division of assets process, even if it was founded before the date of your marriage. First, the court will determine if the business is considered a marital or separate asset. Once that determination is made and if the business is a marital asset, your business will need to be divided equitably.
How You Can Prepare
You can prepare for this division of assets process by having all financial and incorporation documents organized and prepared for use by the court. The court may need to review these documents during their determination of ownership or to prove if assets are hidden within the business.
You can organize your documents both digitally and physically for reference. Having copies on hand can also help your attorney review this asset while preparing your plan for the equitable division of property in your divorce.
How The Business Can Be Divided
There are three main ways businesses are divided in Pennsylvania divorces:
- Co-ownership: if the divorcing is amicable and the couple both wants to continue to run the business, they can split ownership of the company. This option will only work if the couple can effectively communicate and compromise.
- Splitting the profits: if neither party wants to share the business, they do have the option of selling the business to split the profits. After the sale of the business, neither party will have control over it.
- A buy-out: if one party wishes to control the business following divorce, they can offer to purchase the other party’s shares or negotiate for the business in the division of property process. To buy out through asset negotiation, the eventual sole business owner may need to take on more debt or give up desired assets to see the property division as equitable.
What This Means For Your Business
With this process, you may be concerned about how your divorce will affect your day-to-day operations. You may need to prepare for an onsite visit during your business valuation or find documents you haven’t touched in years. As you compile all necessary documentation for your divorce, you should also ensure that all vital documents for your business have easy access and are organized for future reference.
If your spouse hopes to gain sole ownership of the business, they may begin hiding assets for their ownership following the finalization of your divorce. Make sure to have copies of all financial documents and thoroughly review them to make sure assets are not hidden within your business. If you believe you have found hidden assets, you should alert your attorney and they can consult a forensic accountant to review your business assets.
Depending on the path of asset division, you may need to share important information about your divorce with those at your company. Since you share ownership with your spouse, you may need to announce any changes in ownership or operations if you do not opt to co-own the company following your divorce. In these announcements, you should only share need-to-know information with your employees.
Bergen County Business Divorce Attorneys
Our divorce attorneys at Sherwood, Johnson & Poles understand that business owners are worried about their business during their divorce. With over 60 years of combined experience, our divorce attorneys are prepared to fight for you and your business's best interests.
Do you have shared business interests with your spouse? Schedule a free consultation with our skilled divorce attorneys by calling (888) 224-1218 or contact us online to learn more about how we can help you protect your business interests.