How Your Divorce May Affect Your Business

 Posted on December 29,2018 in Business and Divorce

Going through a divorce can be perilous for your business, particularly if it is a smaller, family-run business. Some owners have seen the value of their business drop or lost control of it because of the consequences of the divorce process. It is important to work with your divorce attorney on protecting your business during the divorce and allowing it to thrive afterward.

Marital Property

You may need to fight for ownership of your business during your divorce negotiations. Your business is marital property if you created it during your marriage or used marital assets to invest in it. A business that predates your marriage can be nonmarital property, though the amount that the business increased in value during your marriage can be a marital asset. You have several options when your business is part of the equitable division of property. You can:

• Have complete ownership of the business in exchange for other marital assets of equitable value;
• Co-own the business with your former spouse after the divorce;
• Split your business into two companies that you own separately; or
• Sell your business and divide the proceeds.

The option you choose may depend on the size of your business and how involved your spouse is in it. Your spouse may be content to let you keep the business if he or she is not part of it. A spouse who helped create and run the business may be unwilling to give up his or her business ownership without ample compensation. However, co-owning or dividing a small business may be impractical, and selling your business means losing your source of income.

Profitability

The divorce process may indirectly hurt the value of your business because of the time commitment it requires. Small business owners invest their own time and energy into making a business profitable. Your divorce will demand part of the attention you normally give to your business. Your business profits may go down during your divorce if they rely upon your personal involvement. Unfortunately, some businesses cannot afford that temporary dip in profits. You will need to more efficiently manage your time and find someone who can share some of the responsibility for running your business.

Contact a DuPage County Divorce Attorney

You can protect your business by creating a premarital or postmarital agreement that names you as the owner of the business in the event of a divorce. If you are divorcing without such an agreement, you can still maintain ownership of your business through negotiations. A Warrenville, Illinois, divorce attorney at Calabrese Associates, P.C., understands the importance of your business during your divorce. Schedule a consultation by calling 630-393-3111.

Source:

https://www.reuters.com/article/us-column-cohen-divorce/divorce-has-immense-impact-on-small-businesses-idUSTRE78R4FG20110928