Do Business Owners Face Unique Challenges in Divorce?

If you own a business and are getting divorced here in Raleigh, NC, you do face some special challenges. Divorce for business owners is not as straightforward as in other situations, and it’s important to talk with a divorce attorney as quickly as possible to make sure your business and everything you’ve worked for is protected.

Divorce for Business Owners in Raleigh, NC

How the State Views Your Business

North Carolina is what’s known as an “equitable distribution state,” which means your business is likely going to be considered joint marital property and divvied up. All property acquired during a marriage is subject to this split, so if you started your business at any time after getting married and before you officially separated, it’s up for grabs. 

If you started the business before getting married, it’s possible that it will be considered separate property. However, it’s very easy for separate property to become marital property if your spouse made any kind of contribution to the business. For example, if your spouse worked in the business, particularly unpaid, this might transform it into marital property for the purposes of distribution. 

Even if your spouse did not actually work at the business, if they did extra things for you to enable you to pour yourself into the business, then they might be considered to have contributed. If you use any shared funds to prop up the business, then it would almost certainly become marital property.

How the Business Will Be Divided

The best-case scenario is if you and your spouse can agree on dividing all your assets, including your debts and the business. If you can’t, however, then the court will choose a scenario that it believes is most equitable.

This might require selling the business and then splitting the proceeds in some way, having one spouse buy out the other spouse’s interest in the business, or having the spouses continue to run the business together as joint owners even after they divorce.

How to Protect Your Business

If you are already a business owner and either considering marriage or are married and considering divorce, take steps to protect your business. First, make sure that any contributions made by your spouse are fully and properly recorded. When it comes time to divide the business in a divorce, these kinds of records can help establish what’s actually fair.

The next thing to do is take a salary from your business, if you can. If you don’t, your spouse may argue later that they should receive a larger proportion of all your marital assets because you did not contribute to the household expenses through your salary.

Third, talk to a lawyer about the best way to set up written agreements to protect your business. If you’re not yet married, set things up with a prenuptial agreement so that it’s clear what each partner gets in the divorce and any business partners are protected.

Contact a Divorce Attorney

For help getting through a divorce when you own a business, contact us now at Gantt Family Law in Raleigh, NC. We also have offices in Apex, Durham, and Sanford and serve clients within a 45-minute radius of Raleigh, including Wake, Orange, Lee, Durham, Chatham, and Johnston counties.

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