Answer: It Depends (Yes, we know this drives you crazy, but it IS the truth.)
If you are reading this, you likely are going through or thinking about starting the emotional and complicated matter of divorce and you have a ton of questions. It’s hard to pull the trigger without all the facts, especially when you have worked hard to build a business! The most intricate matters of divorce often relate to assets and money.
The answer to whether one’s spouse will get part of a business upon divorce typically depends on a few main factors:
- When was the business was started, if it increased in value, and whether or not there was a Prenuptial or Postnuptial Agreement.
If the business was acquired or started before the marriage, there is less of a chance that it will be considered a marital asset. However, if marital funds were used to support the business, and the spouse was involved with the business operation and growth, it likely will be included as a marital asset. Increased value in the business throughout the length of the marriage may also make it fair game for consideration of the business being a marital asset.
If the business was acquired during the marriage (unless it was a gift or inheritance), it is marital property, and will be treated by the Court as such.
In Pennsylvania, marital assets are not necessarily split 50/50, as is the case in some other jurisdictions. Instead, the Court will look to split the marital assets fairly, however that may be decided. Usually, the financial situations of both parties will come into the picture, as well as marital contributions.
If you had a legal and enforceable prenuptial or postnuptial agreement done, then you are likely able to avoid sharing your business with the spouse if it was mentioned in the agreement.
Attorney Tonilyn Kargo, an experienced family law attorney in our Ebensburg office location has a helpful bit of advice for determining whether a spouse will get part of the item in question.
“If it’s a marital asset or has increased in value over the time of the marriage, the spouse can get part, unless it is a gift or inheritance.”
You might be wondering ‘now what?’
How can I protect myself and my business?
You may be able to maintain the value of the business and full ownership of the business if you give your spouse their value through other high-value assets. If they are a co-owner in the business, you may be able to buy them out to maintain full ownership. Further, you could pay the spouse their share over time with the profits from the business. These solutions will ultimately depend on the situation and the parties.
Divorce is complicated, but with the right mindset and assistance, it can be a lot less stressful than it otherwise would be. You need legal representation for your divorce so you have peace of mind while you get your freedom. Contact us at (888) 733-8752 for a free Discovery Session to learn how we can help you get your freedom and peace with the least amount of financial and emotional damage possible!