Running a small business or professional practice can strain close relationships. Those who are single-handedly responsible for the success of a local company or professional practice often devote a significant amount of time to establishing and running their companies. They may reinvest their income in the business, limiting how much financial support they can provide their families.
The stress and financial challenges of trying to establish a company can damage marital relationships. Even if the business does not contribute to the decline of the marital relationship, it can still potentially complicate divorce proceedings. Business owners preparing for divorce often need assistance to effectively address the three serious concerns outlined below.
1. Ensuring sole ownership
Business owners frequently use marital income to start or maintain their companies. They may not want to share ownership of the business with a spouse when they divorce. Developing an appropriate divorce strategy that prioritizes the retention of the company while allowing for compromises on other key issues can help business owners and successful professionals limit the lingering economic connections they have to their spouses.
2. Preserving business equity
Frequently, a portion of the fair market value of a business is marital property, which means that the non-owning spouse has a partial interest in the company. Withdrawing equity by refinancing business loans or liquidating organizational resources is the simplest solution for ensuring an equitable property division settlement. However, business leaders may not want to endanger their companies by withdrawing equity or liquidating assets. They may need to identify other assets that can help offset the value of the company during property division negotiations.
3. Financial support complications
The unpredictable income generated by a business or professional practice can complicate the process of calculating financial support obligations. Whether a dependent’s spouse requests spousal support or a business owner must pay child support, accurately estimating income to establish a reasonable support order can be difficult.
Partnering with an attorney familiar with the unique challenges of high-asset divorces involving business-owning spouses can help people preserve the resources that may allow them to rebuild effectively after the end of a marriage. Establishing clear economic goals early in the divorce process can be beneficial for those anxious about a prospective divorce accordingly.