Divorce can be complicated, especially when you own a business. It’s important to take steps to protect your business assets and ensure they are safe during the divorce process. Here’s what you need to know about protecting your business assets during a divorce in North Carolina.
Understanding Business Assets
In North Carolina, assets are classified as either marital or separate property:
- Marital Property: Assets acquired during the marriage are usually considered marital property and are subject to division. This includes businesses that started or significantly grew during the marriage.
- Separate Property: Assets acquired before the marriage, after the date of separation, or as inheritances and gifts given specifically to one spouse are considered separate property.
Steps to Protect Your Business Assets
- Pre-Nuptial or Post-Nuptial Agreement: If you plan to get married or are already married, consider creating a pre-nuptial or post-nuptial agreement. These documents can specify how business assets will be handled in case of a divorce.
- Keep Business and Personal Finances Separate: Make sure to keep your business finances separate from your personal finances. Avoid using business accounts for personal expenses. This shows that the business is a separate property.
- Pay Yourself a Fair Salary: Instead of reinvesting all profits back into the business, pay yourself a fair market salary. This can help show that the business income is part of the marital estate while keeping the business value as separate property.
- Shareholder or Partnership Agreements: Create a shareholder or partnership agreement if you have business partners. This can outline what happens to a partner’s share in case of a divorce and help protect the business from disruptions.
Document Business Value and Growth: Keep detailed records of your business’s value and growth, especially if the company was started before the marriage. Regularly document financial performance, including revenue, expenses, and valuations.
Buy-Sell Agreements: A buy-sell agreement can plan for what happens to an owner’s interest in the business in case of a major event, like a divorce. This can help prevent a spouse from claiming ownership in the business.
Navigating the Divorce Process
During the divorce process, the court will consider various factors to decide how to divide business assets. Here’s how to navigate this process:
- Hire a Valuation Expert: An expert can provide an accurate valuation of your business, which is important for fair division. The valuation will consider factors like the business’s assets, income, and market value.
- Negotiate a Settlement: Try negotiating a settlement with your spouse that protects your business interests. You may offer other assets in exchange for keeping the business or agree on a buyout.
- Seek Legal Advice: Consult with a family law attorney who understands business valuations and asset division. They can guide you and represent your interests throughout the process.
Protecting Your Business for the Future
Protecting your business assets during a divorce requires careful planning and strategic action. Understanding how business assets are classified, taking protective measures, and seeking professional advice can help safeguard your business. It’s essential to maintain a clear separation between business and personal finances. Document your business’s value and growth, and consider legal agreements such as pre-nuptial or post-nuptial agreements, shareholder agreements, and buy-sell agreements. Taking proactive steps now can save you significant stress and financial loss, allowing you to focus on growing your business post-divorce.
Krista Stallard
Krista Stallard is an experienced family law attorney specializing in divorce and custody cases, passionate about alternative dispute resolution, and committed to providing excellent legal representation to her clients.
For help protecting your business assets during a divorce, contact Stallard & Bellof today. Our experienced family law attorneys are here to guide you and ensure your business interests are safe. Schedule a consultation with us now.
