Protecting their business is often an owner’s main concern when they seek a divorce. They want to ensure its success and continuation, even while they experience a significant change in their personal life.
But ownership interests and business assets are often included in the property that must be divided in the event of a divorce.
When is a business subject to division?
Many business owners might think that their business should not be subject to property division during their divorce, especially if:
- They owned the business before they were married
- Their spouse was not involved in business operations
These two factors would indeed classify an asset as separate property under the terms of North Carolina law. However, business assets are often much more complicated than this.
A business might very well be separate property if it meets all of the specific qualifications under the law. But a business is naturally a complex asset, with so many moving parts and interests. Dealing with business assets in a divorce is a challenge for a few reasons, including:
- Business owners will still have to factor their income into property division, even if a business is held separately
- It is easy for individuals to mingle business assets and personal assets
For example, even if business owners started their business before the marriage, if they invest marital assets into it, the business itself becomes marital property.
Plan carefully before a divorce
Many sources, from Forbes to Inc. Magazine, agree that business owners must begin planning to protect their business long before they even consider getting a divorce. They must carefully evaluate and calculate the ownership interests in their business to determine how they should approach the property division process.
It is in a business owner’s best interests to prepare for the worst-case scenarios their business could face. They should do this regarding events in their personal life as well since these events can often have a huge impact on the future of their business.