Necessary Knowledge to Protect Your Best Interests
Business owners preparing to go through a divorce should be well-equipped to defend their best interests throughout the process. Understanding the state’s property division laws and relating them to your business can provide you with clearer expectations.
Here are key factors to keep in mind when determining what might happen to your business during a divorce.
Marital Property vs. Non-Marital Property
Your first step should be to identify whether your business qualifies as marital property or non-marital property. Marital property is defined as any asset acquired while you and your spouse were married; it is typically this type of property that is divided during a divorce. Non-marital property, on the other hand, is any asset that was owned prior to getting married or meets certain conditions (such as a gift left to one spouse).
Depending on when you started your business can be a key determining factor in whether or not your business is up for asset division. A business started while you and your spouse were married counts as marital property and must be divided; additionally, if your business was started prior to your marriage yet you mingled your profits with your other finances in the same account, then that money may be up for division.
Pennsylvania’s Equitable Distribution Laws
Pennsylvania courts will divide assets based on the principle of equitable distribution; this means that marital property will be divided in a way that is fair to both parties based on various factors. It is possible that this could ultimately result in an equal split of assets, but since equitable and equal mean different things, this is not a guarantee.
Your business could be divided in your divorce if it is deemed fair to do so; however, you can provide your business with better protection. For example, if you wish to keep your business under your sole control, then you may have to be willing to let go of other assets in the process. Additionally, it may be helpful to work with an outside business valuation expert who can help you determine an accurate and fair value for your business.
Get Your Asset Division Questions Answered
Business owners have every right to take steps to protect their financial interests during their divorce. If you are unsure of how you can defend the results of your hard work, consult with an attorney who understands high-asset divorce and can guide you on how to protect your business. At Statt Law, we know that protecting your assets is important, and our team is committed to helping you to a solution that meets your needs.