A divorce will impact many areas of your life, whether indirectly or directly. Of course, there is simply no denying the emotional toll a divorce can take and the very real concerns you may have about what will become of your assets. These particular concerns are usually more intense if you happen to own a business.
It is possible you can make it through your divorce with your business intact and even healthier than before. However, as with many decisions in business, getting a positive outcome in your divorce will require some thinking ahead and preparation. This is why it is vital that you learn the different ways a divorce can impact your business. Otherwise, you won’t be able to plan ahead to prevent them or handle them in the best manner possible.
Impact on Your Assets
Generally, the most direct way a divorce will impact a business is through the division of assets of the marriage. Exactly how this will affect your business will depend on whether your business is a marital asset or your separate property.
Marital assets are largely defined by their acquisition date. If you owned your business before your marriage, it may be your separate property. If you acquired the business during the marriage, it might be marital property even if your spouse was never involved in running it. However, keep in mind that there are exceptions here depending on your situation. If separate business assets became commingled with marital ones, for example, those business assets may be viewed as marital property. If you acquired a business during the marriage using your own separate assets or inherited it from someone, it may be viewed as separate property.
When you divide property in your divorce, only your marital assets will be involved. If your business is viewed as a marital asset, you may need to negotiate with your spouse to leave that business alone in exchange for other valuable assets.
Impact on Your Partnership
Sometimes, a divorce will change the leadership or ownership structure of a business. For example, if you and your spouse were co-owners and operators of a family business, the divorce could leave you running everything on your own. In this situation, you may need to bring in a new partner to help you.
In other cases, divorcing spouses choose to work together in the family business. This may be an option if you are both still able to work together professionally despite the end of the marriage. If you are considering this route, you should have a more formal partnership agreement in place. This will clearly define your respective responsibilities and roles and set restitution methods for potential disputes in the future.
Impact on Your Reputation
Divorce can, unfortunately, become a public affair for business owners. While your divorce is unlikely to face the same level of scrutiny as a public figure who owns a very large corporation, you may find that it is still affecting the reputation of your business. If, for example, your business has a “family values” reputation, a divorce can call that into question for some people. It can also worry employees who are now concerned about the outlook of the company.
The more contentious your divorce becomes, the more likely it will harm the public perception of your business. You may be able to reduce that harm by keeping the divorce as private as you can and making a real effort to negotiate a civil settlement with your spouse.
Divorcing as a business owner brings with it many additional challenges. Contact an experienced divorce attorney for help as soon as you can.