Business assets and liabilities can be some of the most difficult interests to deal with during a divorce. Participation in business can range from a pure investment interest to working in a long-standing family business. In a disputed divorce, litigating business interests can take years and place the business in a vulnerable position.
It is generally better for both parties to negotiate the treatment of business interests before going to court. The spouses can come to a mutually agreeable way to divide up the business interests and responsibilities instead of having the court make their own determination. Mediation may be another option to come to an agreement for business assets without leaving it up to the court.
When a divorce involves a family business or high asset business ownership, you need an experienced Missouri divorce attorney who understands what is at stake for business owners to protect their interests in a divorce.
How Are Business Assets Handled in a Divorce in Missouri?
All assets in a Missouri divorce are divided up based on equitable distribution. Equitable distribution is the division of marital assets and liabilities acquired during the marriage. This system is not necessarily dividing assets 50-50 to each spouse. Instead, it is supposed to be a system based on fairness. Equitable distribution considers the financial circumstances of each spouse and divides property in a way to ensure each party receives a fair share of the marital property.
In order to divide assets, the court first determines whether property or liabilities are considered marital property or separate property. Marital property is all property acquired by either spouse during the marriage. Missouri law presumes all property received by either spouse during a marriage is marital property, subject to exceptions.
Generally, property acquired before marriage is non-marital property. Property that would not otherwise be nonmarital property does not automatically become marital property just because it may be commingled with marital property. However, there are exceptions that may convert separate property to marital property.
Business asset treatment may depend on whether it was owned by only one spouse before the marriage, whether it was acquired during the marriage, or whether each spouse had a role in gaining or increasing the property interest.
Spousal Ownership Interest in the Business
A spouse may have an ownership interest in the business separately or as part of marital property. If the business interest is financial and the other spouse is not involved in any way in the running of the business, it may be more straightforward to estimate the value of the interest of marital property and equitably divide the value of the interest.
This may depend on the type of company, ownership interest, and what each spouse wants to do. Each spouse may divide up their ownership interest and be able to continue ownership through stock or securities or the company may buy back the interest from either or both spouses.
Family Business After Divorce
One of the most complicated business issues in a divorce is handling a family business. This includes a family business started by both spouses or one spouse's family business that continues after the marriage. Even if the business was started by one spouse prior to marriage, the other spouse may gain a property interest in the business over the course of the marriage. There may be a number of alternative ways to handle the business instead of letting the court determine how to allocate marital business property.
A prenuptial or postnuptial agreement can be used to control how certain assets are treated in a divorce. A prenuptial agreement is a contract entered into by individuals in consideration of marriage and can provide for how business property will be handled in the event of a divorce.
Prenuptial agreements are generally enforceable when each spouse has the opportunity to consult with an attorney before signing the agreement, the contract was entered into voluntarily, the agreement provides a full disclosure of each party's financial assets and resources, and the agreement is not unconscionable or illegal.
Continue Running the Business
Some couples may be able to continue running a business after a divorce. This really depends on the individuals as many people have a hard time continuing a close relationship after a divorce, even in a professional environment.
The shareholder agreement of the business may provide for how to handle business assets and ownership in the event of a divorce or when a non-family member is in possession of shares in the company.
When each party has a property interest in the business, one spouse may be able to buy out the other spouse's property interest. This will allow the business to continue to operate without subjecting the business assets to the unknown prospect of a disputed divorce.
Consult a Missouri Divorce Attorney
Protecting your business in a divorce can be a complicated process. With the assistance of Cass County divorce attorney Joshua Wilson, you can feel confident that your divorce is handled correctly and know that you are not alone during this difficult time. Contact the Higher Level Legal Law Firm today at (816) 331-9968 to begin your case evaluation today.