Divorce can always be a complicated and challenging process for everyone involved. There are many different issues that must be addressed before a marriage can be dissolved and each determination can have a significant effect on your finances, relationship with your children, or even where you call home. Divorce can have a particularly serious impact if you own a business either on your own or with your spouse.
Starting and running your own business can not only bring a huge sense of pride and accomplishment but can also be your primary source of income and financial support. If your business is in jeopardy in any way, it can be stressful and can also create serious financial difficulties.
Pennsylvania law requires that all divorcing couples divide their marital property in an “equitable” manner. Equitable distribution does not necessarily mean that everything is split 50-50, however, each spouse will need to receive their fair share. Your business interests qualify as “property” and, therefore, will need to be divided as such. There are different options for dividing business interests, including liquidating the business and dividing the revenue or giving your spouse ownership interests in the business. In many situations, neither of these options is preferable.
There are ways you can aim to protect your business interests in the event of a divorce, including the following:
- Prenuptial or postnuptial agreements – If you already own a business before marriage, it can be a good idea to sign a prenuptial agreement that states your business will remain as separate property and will not be at risk in a divorce. You can also sign a postnuptial agreement after marriage. Be sure to seek help from an attorney to ensure your agreement is enforceable.
- Business agreements – You and your business partners can also sign certain partnership or shareholder agreements that prohibit the transfer of any business interests without the permission of the other owners, or similar terms that may protect your interests from your spouse.
- Other equitable arrangements – If your business is vulnerable but you want to protect it, you can offer other property division arrangements to keep the situation equitable without giving up your business. For example, let your spouse have greater real estate interests, investments, or assets can balance out the agreement.
Call our office at (215) 515-8464 for more information.
The divorce lawyers at the Law Office of Smith & Horwitz in Philadelphia have extensive experience handling complex divorce cases that involve businesses. Call us today to learn more about our services.