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Divorce is confusing and difficult for anyone. Business owners can suffer from additional apprehension about how a divorce will affect their business. Whether you are about to enter a marriage or in the process of getting out of one, we’ve compiled some information about steps you can take to avoid business issues during the divorce process.
While no one expects to get divorced when they’re engaged or first married, taking certain steps prior to a wedding can protect their company down the road. North Carolina is an “equitable distribution” state, meaning that all property obtained during the marriage is subject to a fair division. This does not necessarily mean everything will be distributed equally, rather that assets obtained before your marriage are considered your separate property and not subject to equitable distribution.
If you owned your business before marriage, your business will likely be considered separate property in a divorce. Having a prenuptial agreement in place that lists the business as your asset is an additional precaution to ensure the business is not part of your divorce proceedings. Prenuptial agreements are particularly helpful if both spouses are small business owners.
If you started your business after your marriage, it is subject to equitable distribution. To determine what is equitable in regards to your business, a court will look at the legal structure of the business, business assets acquired during your marriage, and each spouse’s role in the business.
During your marriage, if you need to protect your small business, a postnuptial agreement is a good option. A postnup is similar to a prenup, but this type of agreement is signed after the marriage. A postnuptial agreement is a signed agreement between spouses that can designate assets as separate property or outline how they are divided in the event of a divorce, including your business.
Creating a tailored prenup or postnup agreement with the help of an experienced divorce attorney is a good option for those interested in protecting their business after they’re married.
If you are a business owner and contemplating either marriage or divorce, give our expert attorneys a call today to discuss your options.