When Half is a Bad Fraction: Can your Spouse Claim Half of your Business?

One of the most common questions that many business owners ask when they are getting divorced, is whether the split will also cost them half of their business alongside other assets.

Getting help with your divorce from someone like www.divorceguru.com should allow you to find out what the situation is with regard to the business that you own, and you would not be alone if you were concerned about the implications of ending your marriage and how it might impact on your business interests.

Not a situation to tackle on your own

The fundamental point to take on board in a scenario where you own a business and are getting a divorce, is that you would do well to get some professional help to deal with the situation rather than make any dangerous assumptions or try to deal with things yourself.

Let’s face it, half is a bad fraction when you are in a divorce situation, as the immediate assumption is that you may well have to forfeit half of your business and other assets as part of the divorce settlement.

It will often pay to remember that you will need to approach this situation with a clear head and aim to set aside any unhealthy emotions, replacing those negative thoughts with a logical approach to the situation you find yourself in.

Your business is an asset

However you look at it, if you are running a successful business, it is an asset that will need to be characterized and valued in a divorce settlement scenario.

What this means is that there will be a process to go through which looks at how the business is structured, what it is worth, and whether it is to be viewed as a community or separate property.

This characterization process plays a pivotal role, as does the valuation, which is why it is important to get some knowledgeable help on your side, so that you have a clearer picture as to what extent your business will be involved and affected by a divorce.

Numerous questions and scenarios

As you might imagine, the circumstances surrounding how your business is structured, when it was founded and how it was funded, are just some factors that can determine the outcome of your divorce settlement.

For instance, you will want to know whether your wife is still entitled to half of your business when you divorce, even if the venture was started with separate property funds outside of the marriage.

This question and many others like it, require professional guidance in order to provide the right answer and what the implications surrounding each response are.

A change in circumstances

There is a phenomenon in divorce situations where a business is involved that is recognized by divorce professionals as sudden income deficit syndrome.

This is where a business owner recognizes that a divorce situation is looming and suddenly starts to draw less income or shift the emphasis within the business to an extent that it does not look like it is doing as well as it once was.

Both parties involved in the divorce, who will be sitting on opposite sides of the fence, should be aware of this situation and expect tax returns to be scrutinized and a forensic accountant might take a very close look at the financials, if there is any suspicion of sudden income deficit syndrome being applied.

If you are facing a divorce, half may well be a bad fraction that you worry about, which is why you should seek out some professional help on the matter.

Corey Burrows is a business analyst and personal finance consultant. He enjoys enlightening his readers with little known facts from the world of finance and economics. His articles mainly focus on family and finance issues.

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