What Business Owners Need to Know When Filing for Divorce in Tennessee
Franklin divorce lawyer helps business clients protect themselves after marriage ends
Everything you acquire while you are married becomes subject to division when you get divorced. (If you have a prenuptial agreement, then this article most likely does not apply to you). Even if you owned property or a business before the marriage, you still will probably have to divide the value by which the asset increased during your marriage. That means that if your business took off while you were married and started doing well, you may owe your spouse as much as half of that increased value when you divorce.
But that’s just the start of what should be considered if you or your spouse own a business when you get divorced. There are many scenarios which present complex questions about how assets are divided in a divorce.
If you and your spouse purchased and ran the business together during your marriage, determining the division of assets may be relatively simple. A valuation of the business will probably need to be done to understand its worth, and then you will either need to sell it and split the proceeds or one of you will need to buy out the other. The situation gets more complicated when you both want to remain involved in the business.
If you or your spouse owned the business before you married, that becomes more complicated. For example, maybe your spouse owned the business, but you were hired on and received an income or a share of the profits. Or maybe you worked at the business, helping it grow and succeed, but you were never paid a formal income. Yet your influence on the business’ success is without question. Or perhaps you contributed a family inheritance to expanding your spouse’s business. Each of these scenarios gives you a greater claim in the value of the business besides its natural appreciation during your marriage.
For example, your spouse owned a business before you met and you had nothing to do with the running of the business. Yet your marital money still went toward improving the business, and the amount the business appreciated during your marriage is still subject to the equitable division of assets. Where things might get complicated is in the valuation of the business. Your spouse might suddenly claim that the business is struggling and it’s not making any money, or is making less than you thought. Your spouse might even use deceptive tactics to undervalue the business or personal income, such as using business money to pay for personal expenses, thereby undermining the business’ bottom line. Since the business is paying for personal expenses, your spouse would not need to draw an income and could then try to claim to have no personal income from which to pay you child support or a fair amount of alimony.
Your spouse can also refuse to, or delay, handing over important documentation to show the value of the business. Meanwhile, you are running up legal fees and may give up, or rush to settle, so you can recoup some of your financial losses. Your spouse may even take illegal measures to hide assets.
As an experienced Franklin divorce lawyer, I’ve seen it all (or most of it). When necessary, I work with forensic accountants and business specialists who can determine the true value of a business so I can fight for a fair distribution of assets for my clients. I analyze details of the financial record and the business operations to show where my clients have contributed and deserve a greater share of the business value. For clients who own their business, I use the same process to show how they deserve to retain the rights to their business and to a greater share of its value. Call my office today at (615) 791-8511 to start talking about your divorce and your business, or use my secure online form to schedule a consultation.