Colorado Attorney Assists Divorcing Couples Who Own a Business
As a business owner, you can expect a few different things from the divorce process than an individual who is employed by another owner’s company. All divorces involve the equitable distribution of the couple’s marital assets, which include small businesses operated by one or both parties and the couple’s business interests. This is often true even if the business-owning spouse was involved in his or her business before entering the marriage. When issues like small business interests and unique assets come into play, the couple faces a complex divorce.
How are Different Business Types Divided and Affected by Divorce?
There are a lot of factors that determine how a business is divided in your divorce. One of these is how your business is incorporated. Another is whether there are other partners involved in the business and if you have a business succession plan in place.
Our team will examine all relevant facts about your business to help you understand how it may be divided in your divorce. A few general facts to keep in mind:
- A sole proprietorship and its owner are legally the same entity, which means that the owner is personally liable for all business debts. In contrast, owners and members of limited liability companies (LLCs) and corporations are generally not personally liable for business debts. With a partnership, general partners are personally liable for business debts but limited partners are not. If you are personally liable for your business’ debts, you and your spouse can be required to pay these debts in your divorce;
- Although an individually owned business is normally considered separate property, yours may be deemed commingled property and thus, subject to division in your divorce if it changed in value after your marriage or provided part or all of your household’s income; and
- Your plan for the business after your divorce can determine how it is valued and divided. You might be required to have your share bought out or to sell it under your business succession plan or you might have room to decide what to do, such as continue to operate the business as co-owners, sell the business, or buy out your spouse’s share.
How you Own your Business Determines How it is Handled in your Divorce
Do you actively or passively own your business? The answer can direct you toward the right way to handle it in your divorce. Does your spouse play an active role, a passive role, or no role at all in the business’ day-to-day operation? That, too, matters.
Restructuring the business can be a way for you both to remain involved in its operation while protecting your interests after the divorce. You might opt to become a passive partner while your former partner operates it or vice versa. You might instead choose to hire another party to manage it or you might opt to sell the business and split the profit.
Work with a Denver High Asset Family Attorney
High net worth couples have different needs than middle and lower class divorcing couples. To ensure that your interests are protected and promoted at all times, work with a divorce lawyer who has specific experience representing Colorado business owners. Contact Nicholas Family Law today to schedule your initial consultation in our office.