Whether you’re a small business owner, co-own a business with your spouse, or are concerned about how divorce will affect your business, having the right legal guidance is essential.
At Douglass & Runger, we specialize in helping business owners navigate divorce in Memphis and the surrounding areas. This comprehensive guide will walk you through everything you need to know about protecting your business, dividing business assets, and understanding how divorce laws impact business ownership.
How Divorce Affects Business Ownership?
One of the most pressing concerns for business owners going through a divorce is how the business will be affected. In Tennessee, a business can be considered marital property if it was started during the marriage or if marital funds were used to support it.
In a Divorce, Who Gets the Business?
The division of a business in a divorce depends on several factors, including when the business was founded, the level of involvement of each spouse, and the business’s valuation. Courts may divide the business, grant ownership to one spouse, or even force a sale.
If you and your spouse co-own the business, things can get even more complicated. It’s crucial to have a clear strategy for dealing with business assets, whether through negotiation, mediation, or litigation.
Will I Lose My Business in a Divorce?
While it is possible to lose some control or ownership of your business during a divorce, it doesn’t have to be that way. Legal strategies such as pre-nuptial or post-nuptial agreements, buyout options, and business valuations can help protect your business. Working with an experienced divorce attorney familiar with business ownership is essential to ensuring that your business survives the divorce process.
Dividing a Business During Divorce
Dividing a business is different from dividing other types of marital property. It involves not only determining the value of the business but also understanding the role that each spouse played in its success. Courts look at several factors when deciding how to divide a business, including:
- Business Valuation: Determining the fair market value of the business.
- Spousal Contributions: Assessing the involvement of both spouses in the business’s operations.
- Business Debt: Considering any business loans or liabilities.
If you’re concerned about how your business will be divided, it’s essential to start the business valuation process early and gather all necessary financial documents.
Proving Business Ownership in Divorce
To protect your business during a divorce, you need to prove ownership. This includes showing that the business was started before the marriage or that you are the sole owner. Proper documentation, such as incorporation papers, business licenses, and tax filings, can be critical in proving ownership.
Divorce and Business Partnerships
If you and your spouse are business partners, the divorce process can become even more complex. Divorcing a business partner involves not only dividing marital assets but also figuring out how to continue (or dissolve) the business relationship.
How to Divorce Your Business Partner?
When divorcing a business partner, you have a few options. You can negotiate a buyout, continue running the business together (if feasible), or sell the business and divide the proceeds. Each option has its pros and cons, and the right choice depends on your relationship with your spouse and the future of the business.
How Does Divorce Affect a Business Partnership?
Divorce can have significant effects on a business partnership. For example, if both spouses are co-owners, the court may order one spouse to buy out the other. Alternatively, if neither party wants to continue the business, the court may order the sale of the business and divide the proceeds.
If you are in a business partnership with your spouse and are facing divorce, it’s important to have a plan in place. Working with a divorce attorney who understands business law can help you navigate this difficult process.
Starting a Business During or After Divorce
Divorce can also open up new opportunities. Many people start a new business after their divorce as a way to rebuild their financial independence. However, if you’re considering starting a business during or after divorce, there are several things to keep in mind.
Starting a Business During Divorce
Starting a business during divorce can complicate the division of assets. Any income generated by the business may be considered marital property, which means it could be subject to division in the divorce settlement. It’s essential to consult with an attorney before starting a new venture during this time.
Starting a Business After Divorce
Starting a business after your divorce is finalized can be a great way to regain financial control. However, it’s important to ensure that your divorce settlement is structured in a way that allows you the financial flexibility to pursue new opportunities. Whether you’re starting from scratch or using assets from your divorce to fund your new business, planning is key.
Protecting Your Business During Divorce
Divorce is never easy, but as a business owner, it’s crucial to take steps to protect your business and your financial future. Whether you’re dividing a business, dissolving a partnership, or starting a new venture post-divorce, the legal team at Douglass & Runger in Memphis can help.
Our attorneys have extensive experience handling divorce cases for business owners, and we can guide you through every step of the process. Don’t leave your business’s future to chance—reach out to us today.
