How Do I Protect My Business During a Divorce?

The main protection issue around divorces involving businesses is ensuring that one of the parties does not take actions that negatively impact the business, like spending unauthorized money or taking on additional debt. Practical steps can be taken to limit the ability of parties to engage in these actions. Beyond that, Court orders can be entered that setup protocols for running the business while the case is pending.

Are Businesses Considered Marital Property?

In a divorce, especially for those with a higher net worth, it’s crucial to understand that a business is a special type of property. Here are five key legal points to know:

1. A business is both an asset and a source of income.
2. Any growth in a business that started before marriage is considered marital property.
3. You can’t be forced to sell your business by the court.
4. You can compensate your spouse with other assets to balance the business value.
5. The spouse who doesn’t own the business still contributes to it.

Here’s what to avoid:

1. Don’t delay learning about your rights: Understanding your rights regarding asset division in a divorce is crucial for protecting your interests. Delaying this learning process could leave you vulnerable to making uninformed decisions or overlooking important legal considerations. Take the time to educate yourself about the laws and regulations governing marital property division in your jurisdiction, or hire an attorney to take on the task for you.
2. Avoid emptying joint accounts, as it complicates future agreements: Emptying joint accounts during a divorce can create significant complications and conflicts during the asset division process. It may be perceived as an attempt to conceal assets or unfairly disadvantage your spouse, which can lead to legal disputes and mistrust. Instead of draining joint accounts, work with your spouse to establish a fair and transparent process for dividing assets in divorce. If your spouse is looking for unreasonable terms, hire a high-asset divorce attorney.
3. Don’t rush into selling the business without careful consideration and professional advice: Selling a business is a significant decision with long-term implications, especially in the context of a divorce. Rushing into this decision without careful consideration and professional guidance can result in financial losses and missed opportunities. Before proceeding with the sale of the business, take the time to assess its value, explore alternative options for asset division, and consider the potential impact on your financial stability and future goals. Consult with experienced business valuation experts, financial advisors, and legal professionals who can provide objective advice and help you make informed decisions tailored to your unique circumstances.

When dividing business ownership in a divorce:

1. Assess the business’s value accurately.
2. Offer to buy out your spouse’s share with other assets.
3. If both own the business, the court may favor the spouse who actively manages it.
4. Selling the business is an option but not mandatory.
5. If needed, set up a payment plan for your spouse’s share.

Why Does Your Spouse Get a Part of the Business?

Even if you started the business alone, your spouse’s contributions, like time and support, are considered. This is because their involvement likely influenced the business’s growth.

Consider legal agreements:

Prenuptial or postnuptial agreements can help protect a business from being considered marital property, especially if only one spouse is involved in its operation.

What are the Risks of Not Hiring an Attorney to Protect Your Business Assets?

Here are the risks of not hiring an attorney specifically related to the information provided above about dividing business ownership in a divorce:

1. Not Knowing Your Rights: If you don’t have a lawyer, you might not understand what you’re entitled to when splitting business ownership in a divorce. This could mean you don’t get a fair deal.
2. Difficult Negotiations: Dividing business ownership can be tricky, especially if the business grew before or during the marriage. Without an attorney, you might find it hard to talk things out with your spouse and reach a reasonable agreement.
3. Making Legal Mistakes: Figuring out the value of the business and writing up agreements is complicated. Without a lawyer, you might mess up the paperwork, which could cause problems and delays down the road.
4. Losing Money: Without legal help, you might end up paying too much to buy out your spouse’s share of the business or get less than you deserve in the settlement.
5. Unfair Treatment: Your spouse might have an attorney, which could put you at a disadvantage. Without someone to speak up for you in court, you risk losing more than you anticipated.
6. Not Knowing Your Options: Lawyers can tell you about different ways to split up the business, like buying out your spouse or setting up payment plans. Without one, you might miss out on better ways to handle things.

Hiring a Colorado Divorce Attorney

Remember, navigating the division of a business in divorce requires careful consideration and legal guidance. The lawyer you select can affect the rest of your life. Colorado Legal Group’s team of Denver divorce lawyers and family law attorneys are highly skilled in developing a strategy that will get you through your case in the best way possible; with the best outcomes, lowest cost, and least amount of emotional stress.

Let us guide you through a divorce without the drama, without costing you a fortune, and without ruining your family.

Submit a free case evaluation today or call us at (720) 594-7360.