When you think that a divorce is imminent, you should start taking steps to protect your business. You might think that it is unnecessary to do so, but the reality is that your business could be in danger, even if the other person doesn’t do anything with it.
In Tennessee, the law states that property from a marriage is divided equitably. However, what is fair and equitable is open to interpretation. The best thing you can do is work to document what property was yours prior to marriage and also determine which parts of your property should be divisible. If you don’t have a pre- or postnuptial agreement, you’ll want to talk to your attorney about your business and how to best protect it.
What should you know about a business that could be considered marital property?
One of the things to know is that it does matter how much your spouse was involved in the everyday actions of the business. If your spouse was employed by the business or helps run the company, then it is more likely that they will be entitled to a larger share of the business. If your spouse was not involved, there could be a chance to save the business in its entirety for yourself so long as you provide a fair share of additional assets to your spouse upon divorce.
It is possible to pay off your spouse instead of losing your business. You can use a share of marital assets such as real estate or cash to pay them a fair value for their interest in the business. You can also ask them to agree to a property settlement note, which allows for payments over time (including interest).
If you are not interested in continuing to run the business, one of the best options is to sell the business and divide the sales price by a fair factor.
Learn more about your options when it comes to protecting your business, because you want to do all you can to keep as many of the business’s assets in your possession as you can. In some cases, ex-spouses continue to run a business together, but if that’s not a possibility, then selling the business or buying out your spouse may be the best options. No two situations are the same, so it’s important to look closely at how your divorce will affect your business.