One of the biggest fears people have about divorce is the possibility of losing their most valuable assets. For some people, the assets that they focus on during divorce are their marital homes or their retirement savings. For others, a business or professional practice could be the resource that matters the most to them.
A business can represent a significant portion of someone’s personal wealth and can also be their source of income. Those preparing for a possible divorce in Georgia may worry about what will happen to a small business during divorce proceedings. There are several concerns that spouses will need to address to better protect the organization that they started, purchased or inherited.
Is the company separate or marital property?
The most important factor when considering what will happen to a specific asset during a Georgia divorce is whether it is a part of the marital estate or separate property that won’t be subject to division. A business that someone already ran prior to marriage could be separate property, particularly if someone signed a prenuptial agreement affirming that fact. A business inherited from a loved one or started with inheritance funds could also be at least partially separate property.
However, the chances are good that the person running the business would invest at least some marital income in the company, which is a form of commingling that can make the business’s value vulnerable to division. If the non-owner spouse provided financial support or unpaid services to help develop the company, such acts might strengthen their claim that the business is at least partially marital property.
What is the business worth?
Even if the business is not subject to division, the spouse retaining it would typically need to report its value to the courts and their spouse to have it considered in the equitable property division process. The business valuation process can be quite complicated, and having an accurate value for the business will be of the utmost importance to make property division as fair as possible.
What should happen with the business?
There are many ways to address the company during property division proceedings in a Georgia divorce. The spouse who runs the professional practice could retain the company, while their spouse receives assets of comparable value from the marital estate. Other times, the courts could potentially order the sale of the business or even permit continued shared ownership between the spouses.
Those who have very specific intentions for their business during divorce may find that pursuing an uncontested divorce is the best means of controlling what happens during property division. Understanding what happens with the biggest assets in a marital estate can help people more effectively strategize when divorce is imminent.