Separating Business From Divorce
For couples that have managed to successfully run a business together, it can be difficult to realize that they cannot hold a marriage together.
When it comes to running a business with your soon-to-be ex spouse, there are some things you’ll need to consider.
Just like with marital property, your business will be considered an asset.
Below we discuss what options you’ll want to consider when it comes to your shared business.
Three Options For Shared Business.
1. Two of you decide to remain as co-owners of the business.
2. One spouse buys out the other spouse.
3. Sell the business and then split the proceeds.
Dividing Marital Property.
In addition to determining what you will do with a shared business, you will also need to understand marital property division, and what is considered community or separate property.
Keep in mind that you are allowed to divide your marital property any way you'd like to as long as you can show the court the division is equitable. If you and your spouse cannot come to an agreement, the court will make the decision for you.
Protecting Yourself During Marital Property Division.
Regardless of how your marital property is divided, you need to protect yourself. Your ex might not make the payments for various reasons – lack of money, spite, illness. In that case you might need to return to court or various other means of collecting the lost payment.
Because of that, it’s often advised that you protect yourself by getting cash in hand once the divorce agreement is reached. If it’s decided that your ex will pay you out following the sale of an asset, wait until the sale is final, and then ensure you get the money to finalize your divorce.
Financial Planning For The Divorce.
Divorce is not only an emotional event. It can also mean a shaking up of routine and finances. This is especially true if you have co-owned a business with your spouse and have now decided to sell the business.
Knowing that your financial picture will be changing will allow you to prepare for the financial changes that might be coming your way.
You’ll want to get your finances in order prior to starting the divorce process. This means understanding your assets and their values, as well as what is owned separately and jointly.
- Next, you’ll want to do the following:
- Understand what your budget is now, and what it will be following the divorce.
- What are the big changes? Will you need to make changes?
- Get all your bank statements and records together. You’ll want to provide this to your attorney.
- Get copies of all joint tax returns. This also includes checking that your taxes are up to date.
- Do not transfer any jointly owned assets.
- Don’t make any large purchases.
- Do not agree to distribute any assets until you consult your attorney.
After The Divorce.
Your divorce settlement can either mean more money coming your way, or less. Either way, you’ll need to create a new plan for it. This might mean you need to take on a job if you didn’t have one during the marriage.
Any debt you have agreed to take on will now be solely in your name. Make sure that you have both removed the other spouse’s name from any agreements or debt contracts.
You might also be receiving or paying alimony. If there are children involved, you’ll need to understand how much money is allotted to them and for what types of things. Additionally, you’ll need to speak to Cory Gallagher about tax laws regarding alimony payments and child support payments.