Divorce can be complicated and messy, especially if many factors are in play. For instance, what happens to the business after the couple separates? Who owns it?
Rules can vary between states. Given the complexity of the process, it’s best for couples to work with the likes of a divorce attorney. But one can decide better when they know what to expect.
Division of Assets
When couples divorce, they might need to divide their properties. States follow either of the two: community property law or equitable division.
In a community property law, all assets—and debts—acquired during the marriage might be assumed as owned by the two. Thus, they might have an equal share or right for them.
Meanwhile, in an equitable division, the state doesn’t immediately perceive all assets as marital properties. Further, the couples can divide these assets fairly but not necessarily equitably. For this reason, both parties need to determine the value of these properties.
Colorado follows the second option, which is the equitable division of assets. The following might count as marital property:
- Real estate and its equity
- Bank and retirement accounts
- Personal property
- Investments such as stock options
- Business interests
Usually, though, most states exempt the following as marital properties:
- Properties or assets acquired individually, particularly before marriage
- Inheritance or gift received before the marriage
- Assets considered as non-marital properties under the prenuptial agreement
- Assets acquired after the marriage that the couple labels as non-marital
What Happens to the Business After a Divorce?
Business interests could be marital properties. For couples who do not have a good relationship, that can be a threat. It can also be problematic if the separation is likely to change the direction or dynamics of the organization.
There’s no simple answer to the question “What happens to the business after a divorce?” Often, Colorado attorneys and ex-couples need to answer these questions:
- Who owns the business? When did it begin?
- What is the participation of each or both parties in the organization? Is one more active than the other? Is the ex-spouse a non-participant but earns from the business?
- What type of business is involved?
- What do the parties hope to achieve for the business even after divorce?
- Do they plan to stay in the company after the divorce?
Depending on the answers to these queries, the parties involved can pursue these ideas:
- One spouse sells their business interests to the other. They must divest if they have no desire to remain in the company.
- They continue to work together while being civil and professional. They don’t bring their personal issues to work.
- They sell their investments or shares individually and then offer their positions to reliable people.
- They sell the business.
- The parties do nothing with the business but use its value to determine spousal support or alimony.
Divorce is stressful, and the uncertainty it brings to the business, which can be the family’s primary source of livelihood, can only make the feelings worse. But couples need not go through it alone. Colorado divorce attorneys can guide them throughout the process.