High-value assets tend to become focal points during divorce proceedings. People worry about their investments, their homes and their retirement savings.
If someone who owns a business is about to divorce, their company is probably a top priority. Naturally, those who have invested in a business and rely on it for income may worry about how community property statutes might force them to sell the business, liquidate assets to share equity or share ownership with a spouse.
Is it possible to assert that the business is not part of the marital estate during divorce?
Commingling can endanger separate property
There are several ways that a business might be separate property. An individual may have started the company before they got married. They may have inherited it from family members. In such scenarios, other assets could qualify as separate property under state law.
However, the need to continually maintain and improve a business can muddy the waters. Using marital income or resources for company purposes could put the company at risk of division during a divorce. If a non-owner spouse made personal contributions to the company financially or through services, that could also lead to claims of commingling.
Even in cases where only one spouse continually works for the business and has an ownership interest according to documentation, the value of the business could be part of the marital estate. Business owners typically need to approach divorce carefully to protect themselves.
Protecting a company often requires a written agreement or an uncontested divorce filing. Discussing personal priorities early in the divorce process can help business owners with valuable assets and specific concerns reach a reasonable settlement with their spouses.
