For couples that have managed to successfully run a business together, it can be difficult to realize that they cannot hold a marriage together. When it comes to running a business with your soon-to-be ex spouse, there are some things you’ll need to consider.
Just like with marital property, your business will be considered an asset. Like all other aspects of a marriage, including child custody and alimony, there will need to be an agreement made about your shared business. Some couples decide to treat there business as they would a house: either one spouse remains while the other “moves out,” or they decide to sell the house. Below we discuss what options you’ll want to consider when it comes to your shared business.
OPTIONS FOR SHARED BUSINESS
Option number one is that the two of you decide to remain as co-owners of the business. Depending on your relationship, this might be a great solve or the worst thing ever. Keep in mind that this will require you to be in constant communication with your ex, even after the divorce is final. If that sounds terrible to you, this option is obviously not advised. Option number two is for one of the spouses to buy out the other spouse. If this is what the both of you decide, then it’s advised that you hire a business appraiser to perform a valuation of your company. Once the business is evaluated, you know how much it is worth and one spouse can either buy out the other one, or use other assets for an even exchange. The third option is to sell the business and then split the proceeds. This is often advised for marital property such as homes, and it makes sense in this scenario as both spouses are able to move forward equally, without any past ties remaining. Of course, this might seem an out of the question option if the business is performing well, and both spouses are attached to the business.
DIVIDING MARITAL PROPERTY
In addition to determining what you will do with a shared business, you will also need to understand marital property division, and what is considered community or separate property. Keep in mind that you are allowed to divide your marital property any way you’d like to. The only reason your state laws might play a role is if you and your spouse cannot agree to how the property will be divided and you need to go to court.
SEPARATE AND COMMUNITY PROPERTY
Separate Property: property that each spouse brings into the marriage. That spouse retains that after the marriage. This also includes property inhibited by a spouse during the time of the marriage.
Community Property: property acquired and income earned during the marriage. In the comment property states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, community property is usually divided 50-50. Remaining states use a property division principle called equitable distribution. With equitable distribution property is divided fairly (50-50). Occasionally the higher wage earner is given 60 percent to 75 percent of the property.
PROTECTING YOURSELF DURING MARITAL PROPERTY DIVISION
Regardless of how your marital property is divided, you need to protect yourself. Your ex might not make the payments for various reasons – lack of money, spite, illness. In that case you might need to return to court or various other means of collecting the lost payment. Because of that, it’s often advised that you protect yourself by getting cash in hand once the divorce agreement is reached. If it’s decided that your ex will pay you out following the sale of an asset, wait until the sale is final, and then ensure you get the money to finalize your divorce.
FINANCIAL PLANNING FOR THE DIVORCE
Divorce is not only an emotional event. It can also mean a shaking up of routine and finances. This is especially true if you have co-owned a business with your spouse and have now decided to sell the business. Knowing that your financial picture will be changing will allow you to prepare for the financial changes that might be coming your way. You’ll want to get your finances in order prior to starting the divorce process. This means understanding your assets and their values, as well as what is owned separately and jointly. Next, you’ll want to do the following:
- Understand what your budget is now, and what it will be following the divorce. What are the big changes? Will you need to make changes?
- Get all your bank statements and records together. You’ll want to provide this to your attorney.
- Get copies of all joint tax returns. This also includes checking that your taxes are up to date.
- Do not transfer any jointly owned assets.
- Don’t make any large purchases.
- Do not agree to distribute any assets until you consult your attorney.
FINANCES AFTER DIVORCE
Your divorce settlement can either mean more money coming your way, or less. Either way, you’ll need to create a new plan for it. This might mean you need to take on a job if you didn’t have one during the marriage. Any debt you have agreed to take on will now be solely in your name. Make sure that you have both removed the other spouse’s name from any agreements or debt contracts. You might also be receiving or paying alimony. If there are children involved, you’ll need to understand how much money is allotted to them and for what types of things. Additionally, you’ll need to understand the tax laws regarding alimony payments and child support payments. Understanding all of it will make you feel more prepared going into your new situation.
CONSIDER THE MEDIATION PROCESS
Both spouses work with a divorce mediator, who serves as a neutral facilitator, to help the couple come to a mutually agreeable decision regarding their divorce. The mediator will help spouses negotiate division of property, spousal support, and child support and custody. The mediator also does not make any decisions about legal issues, but instead acts as a go-between in the negotiations. Mediation has proven to be successful for couples that are looking to avoid conflict, and also potentially speed up the process of divorce. Here are some things to consider when choosing your mediation lawyer.
Easy and Affordable Divorce mediators often offer flat fees for all of the services they provide. They will also include a free divorce consultation during which you will receive a complete marital estate assessment. The mediator should also help assist with any administrative things such as the filing of the divorce paperwork. Flat fees will allow for you and your spouse to know how much this is going to cost you up front.
A COMPASSIONATE PROBLEM SOLVER
Your divorce mediator should be able to offer various options for solving your complex divorce situation. Additionally, your mediator should be invested in you, your family’s long-term financial wellness as well as emotional health. If these things aren’t clear to you in your first free consultation, you might want to meet with another mediator.
FOCUSED ON END RESULT
Your divorce mediator should be working to ensure that at the end of this process you reach a workable and fair settlement. Focusing on a positive and successful agreement is what your mediator should be doing. One way to gauge this is if your mediator asks whether you and your spouse agree that the marriage is over and you are each ready to move on. They are only able to find a final agreement if both of you are willing to come to one.
Once your divorce is finalized you’ll be able to reclaim your life and do the things you might not have done as a result of your marriage. Do things you’ve always wanted to do. Follow your heart’s desires. By doing so you are offering yourself to the world and finding your own unique way that makes you feel alive. You can choose to stay shut in by the pain of loss and old wounds, but remember that the world will continue to turn. Don’t you want to be a part of it?
WORKING WITH A DIVORCE ATTORNEY
If you are facing a divorce, you need to work with a divorce attorney that can take a look at your specific situation and advise you on all the aspects of divorce you will be facing. This might mean decisions regarding retirement funds, property, child support and custody, and alimony. A divorce attorney will work with you to help you decide how you want to tackle these elements of your marriage and divorce, while also providing guidance and support. They will be able to lead you through the process while keeping you from procrastination and caving into pressure. They’ll also be able to help ensure you meet all the required timelines while ensuring that you get a fair case and trial should you need to go to court. Lastly, they’ll be able to help you find the freedom and new life you are seeking – one that is entirely on your terms.
San Diego, CA 92101
Phone: (619) 431-3131