- Once your spouse's name is on the ownership papers, it becomes a matrimonial asset. In addition, anything you buy or obtain with your regular income is also considered a matrimonial asset.
- Having to sell or share a business can be hard let alone doing it while going through a divorce. Matrimonial assets are different from regular business ownership and so is the sharing process.
- To better handle the issues with matrimonial assets, it is in your interests to get a lawyer who will provide assistance at all times.
- Read on to learn about how divorce can affect business ownership and assets.
I lost my family! Do I lose my business as well? -- If you are asking yourself this question, keep reading.
People say that if you want to test a marriage, you should put the partners to work together. As if the strains of marriage aren't enough.
When partners in life work together this adds an extra level of complexity to the situation. If you are reading this, you most probably don't need anyone to tell you this - seems like you are dealing with divorce with a business involved.
Divorce and business ownership
Let me be blunt with you - it won't be easy and it won't be painless. Dealing with divorce and trying to figure out the fate of your family business very much depends on the willingness of the parties involved to cooperate, but is unpleasant in any way.
Before we can be clear on what is going to happen to your family business, we need to establish a few definitions.
First, what is a separation - by separation we mean the end of a marital relationship that has legal grounds. In most cases, that would be a divorce. If you are still legally married to your partner but separated in life, your family business will not be legally affected and you will need to continue running it as you have been up to now.
Then, what we mean by a family business is any company structure that is owned by both partners. This means that the business has been founded while the two parties are legally married, or that substantial amount of time has passed so that the family business can be claimed as a matrimonial asset.
What is a matrimonial asset?
This term is not to scare anyone although it sounds a little too grand for what it actually is. A matrimonial asset is any material asset (think property, money, cash, shares in a company, etc.) that has been obtained by any of the spouses in the course of the marriage.
Of course, there are some assets that are exempt and present special cases. For one, if an asset has been given to you as a gift from a third party or as inheritance and you are the single legal owner, then this asset is exempt from being a matrimonial asset.
Once you put your spouse's name on the ownership papers, this becomes a matrimonial asset. In addition, anything you buy or obtain with your regular income is also considered a matrimonial asset.
However, if your uncle leaves you his accounting consulting business as an inheritance, that's not a matrimonial asset unless you get your spouse on the ownership papers.
Matrimonial assets are the ones that matter in separation and divorce because the common case is that those are distributed equally between the spouses after the divorce. You and your lawyer can claim different distribution of assets in court provided you have a ground for it.
How are matrimonial assets dealt with after separation?
When you separate from your spouse, the court will look into several things to establish the distribution of matrimonial assets including your small business:
- Is the business a gift from a third party?
- Was the business established before or after the marriage?
- Is the business inherited by one of the spouses?
- How much time has passed since the marriage has commenced in respect to the founding date of the business?
- How much involvement, financial and resource-wise, has each of the spouses had in the business?
Those questions will be the basis of the decision to what happens to your matrimonial asset after separation. The rule of thumb is that all matrimonial assets are distributed equally to each spouse. However, the most important thing here is to remember that the goodwill of the spouses is key to the distribution of assets.
If the family business you are running is your main income source, and your spouse or partner has little involvement, they might agree to sell you their part of the business or receive other assets instead. The best thing you can do to make sure your small business continues running after separation is to consult an experienced family lawyer that can give you professional advice tailored to your specific situation.
Remember - you don't have to deal with divorce and separation alone - your lawyer is your best partner in getting a fair deal of matrimonial assets after the divorce.
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