Could a Divorce Threaten Your North Carolina Business?
If you own a business in North Carolina, you must take the appropriate measures to protect your business during a divorce proceeding. When you know you will be divorcing, schedule a consultation to discuss your business interests and rights with a Greensboro divorce attorney.
Divorce is not easy if you’re a man. You could lose your home, your kids, and even part of your business. If you and your spouse cannot reach your own agreement, a North Carolina court will divide the marital property using the equitable distribution principle. Equitable distribution requires a fair but not necessarily equal marital property division between you and your spouse.
A fifty-fifty split is typical, but the court will consider several factors to determine what is fair. That’s why, in some cases, one spouse may receive a larger portion of the marital property. The key question for business owners is this: Will your business be considered marital property?
When is a Business Considered Marital Property?
In North Carolina, when divorcing spouses cannot agree regarding the division of a business, the court must decide if the business is marital or personal property. To make that decision fairly, the court will need the answers to these questions:
- Did you create or inherit the business? Before or during the marriage?
- If you inherited the business, were you the sole owner, or was it divided with other heirs?
- Do you have any other business partners?
Do not presume that your business will be considered marital property, even if you created or inherited it during the marriage. For example, if you started up your business with personal funds or with funds you inherited, the court may decide that the business is your personal property.
What Must You Disclose?
Both spouses in a North Carolina divorce must submit complete financial disclosures to the court. A disclosure lists your income, properties, assets, and debts. Your Greensboro divorce lawyer will help you complete your financial disclosure forms to ensure their accuracy.
Your disclosure should list all marital and personal properties and assets you have earned or otherwise acquired during and before the marriage. In a North Carolina divorce, any failure to disclose your assets may trigger harsh legal penalties and hurt you in the divorce proceeding.
Complete financial disclosures from both spouses offer the court an accurate, current look at each spouse’s financial situation so that the court may determine what is an equitable and fair division of the couple’s assets and properties.
How Can a Man Protect His Business in a Divorce?
If you are a business owner in the Greensboro area, a Greensboro divorce attorney may advise you to take the following measures to protect your business and handle the problems that inevitably arise for business owners during a divorce:
- Keep comprehensive and accurate business records, and keep your personal finances separate from your business finances.
- Obtain a precise, objective valuation of your business to prevent your spouse from receiving more than what’s fair and just.
- A spouse who has been active in the business has a better case for a fifty-fifty split. If you anticipate a divorce, start easing your spouse out of your day-to-day business operations.
- You may have to offer other properties or assets in exchange for your spouse’s portion of the business. For instance, you may have to trade a real estate holding or retirement account to compensate your spouse for half of the business.
What Are Your Options?
If divorcing spouses co-own a business, they may be able to continue as business partners even after the divorce. In other cases, divorcing spouses may agree to sell their co-owned business and divide the proceeds.
Unless the business is a partnership co-owned with your spouse or a sole proprietorship, you have (or should have) bylaws, a business plan, or an operating agreement that describes what will happen to the business when an owner divorces.
If you own a business and you are divorcing, stay practical. Focus on your long-term interests. Ask your Greensboro divorce lawyer to review any contract or other business document that may affect your business or long-term interests during and after a divorce proceeding.
What Else Should a Business Owner Know?
Don’t let a divorce ruin your business and business relationships. When a divorce is inevitable, don’t be tempted to make your business seem less lucrative. Your spouse’s divorce lawyer will find you out. However, your own divorce lawyer will know how to protect your business legally.
To file for divorce in North Carolina, one spouse must be a resident for at least six months before filing. The couple also must live separately and apart for at least a year. North Carolina is a no-fault divorce state, so no specific reason for a divorce has to be cited other than incompatibility.
A divorce trial may not be your only option. Ask your attorney about the mediation process. It’s usually quicker than a trial, less costly, and a practical way to resolve divorce disputes outside the courtroom with the help of a neutral third-party mediator.
You can’t let an ex-spouse take half of your business and profits while your ex also receives alimony payments indefinitely. A North Carolina divorce attorney at Kreider Attorneys At Law will prevent any “double-dipping.”
Who Should Protect Your Business in a Divorce?
Before you file for divorce, or as soon as you’re served with divorce papers, arrange to speak with a North Carolina divorce attorney who will protect your business and long-term interests. Promptly contact Kreider Attorneys At Law.
Attorney Jonathan G. Kreider brings his extensive legal background to every client and case. Mr. Kreider was appointed as a District Court Judge by Governor Pat McCrory in 2015. He founded Kreider Attorneys at Law in 2019 and now serves and advises clients in Greensboro and the surrounding areas, including Guilford County, Charlotte, and Chapel Hill.
Let us protect your business. Kreider Attorneys At Law will determine your needs, offer sound legal advice, and fight for what is rightfully yours in your final divorce settlement. Call 336-770-2017 to schedule your first consultation with Kreider Attorneys at Law.