18 Aug Legal Protections for Divorcing Couples Who are Business Partners
Divorces happen due to several reasons, and though significant to each couple, usually the divorce stems from certain factors that are seen time and time again. Money and financial circumstances constitute one of the most likely factors that will send a couple to a divorce attorney. Largely, each spouse may have different views on how money should be saved and spent, or the couple may have been through a financial hardship like bankruptcy or medical bills, among other situations that may arise. One of the things that can create a rift is when the couple owns and runs a family business together where each spouse has a role in the business, and they collectively share the profits of the company.
Protect Your Interest in the Family Business
Family-owned businesses are a big part of the emerging market. With the invention of the Internet and the many modalities by which businesses are now being run, it is easier for individuals to start up their business from their home and grow a business with their spouse. There are several risks to owning a business with your spouse and several ways by which you can protect yourself if you and your spouse have decided to get a divorce. Most likely, if you want to split from your partner as a couple, you’ll want to split from your ex-spouse as a business partner.
South Carolina’s View on Marital vs. Nonmarital Property
In South Carolina, property distribution is based on equitable apportionment principles. In other words, the courts in South Carolina determine which property is considered marital and what is considered nonmarital property, evaluate value of the marital property as well as the contribution of each party to the value of the property jointly owned, weigh external factors and/or party misconduct if it attributes to the diminishing of the marital property value, and then apportion the property to each party.
Equitable Apportionment of the Business
With regards to couples who own their own businesses, the equitable apportionment of the business will depend first and foremost on the agreements and contracts signed at the outset of the business. It is important if you are going to start a business with your spouse, that there are contracts and agreements that fully define each party’s contribution to the business so that it is understood who does what, when, and who owns what.
Use of Prenuptial Agreements
Couples may also find it useful to create a prenuptial agreement or postnuptial agreement to determine the equitable division of the business, especially where the business was created before the marriage took place. In a prenuptial agreement, if the business was created by one of the spouses, the spouse who owns the business may include provisions that outline the extent (if at all) that the other spouse has interest in the business at the time of divorce.
Experienced Family Law Attorneys in Mount Pleasant, Charleston Area
Jumping into business with your spouse has many benefits but can also have many drawbacks. An experienced family law attorney at Klok Law Firm LLC can provide guidance on several ways to legally protect your interest in the family business, especially before a divorce happens. Contact Klok Law Firm LLC today for a free and confidential consultation.