When a business is an asset in question during a divorce proceeding it will inevitably raise a number of complex issues that must be worked out. In order to successfully negotiate this process it is important to be represented by an attorney with experience that is specific to divorce proceedings that involve businesses so that your assets are protected in a way that will ideally allow for the continuation of your endeavors. You worked hard to build up your company into what it is today, it only makes sense to protect what you have achieved.
Characterization
The first issue that needs to be addressed when a business is at stake in a divorce is to determine if it is marital or separate property. Businesses that are separate property typically will be protected during a divorce proceeding, while businesses that are determined to be marital property very likely will be subject to the divorce proceedings. If your business predated the marriage, it almost always will be considered separate property. This can, however, be challenged if during the marriage the business has grown in value significantly. Businesses that were passed down to a person through their family, inherited or gifted, are usually a similar situation, again depending on if significant additional value has been added during the marriage.
A more complex issue arises if the business was started with separate property funds, for example if the startup capital originated before the marriage or was gifted or inherited from one spouse's family. In these situations it is possible that the business will be determined to be separate property, however proving that commingled funds were not involved becomes a critical issue that is often difficult to prove.
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