Do You Have a Business? Divorce Options From Portland Family Lawyer Susan Schultz
Divorce…what’s to say about it? It’s frustrating, emotionally draining (and financially in some cases), stressful, and more, but if you and your spouse have decided that divorce or separation is the only viable solution, then it’s important to get your ducks in a row. Also, whether you like it or not, that business you started or own may be swept up in the divorce proceedings.
Fortunately, you don’t have to be alone when fighting for or dividing your business interests with your soon-to-be ex-spouse. Instead, call Portland ME family law attorney Susan M. Schultz at Schultz Family Law. We boast an extensive track record of representing clients in a similar situation, and we have the resources, legal experience, and robust, yet compassionate, legal strategies to protect your interests and push for an attractive solution.
For a consultation, call Schultz Family Law today at (207) 210-6555.
Divorce-Proofing Your Maine Company
Even if you aren’t planning on getting divorced, it’s still important to divorce-proof your company in Maine, just in case. By divorce-proofing your company, you are not only protecting your interests, but you can also prevent or, at least, minimize the amount of conflict that the business may cause in a divorce.
Some legal strategies for protecting your business from a divorce include:
- Before the wedding, you can speak with a Portland family lawyer to draft a prenuptial agreement that clearly identifies the business as a separate property.
- Instead of a prenup before the wedding, you can also consider a domestic asset protection trust (DAPT), which ownership of your company into a trust (the trust would then legally own your company).
- Clearly separate business and personal assets.
- If you spouse plays a role in the business, he/she can argue a right to a share of the cut in the divorce settlement. To reduce this risk, keep business and family life separate and, following the divorce, make separating your bank account a priority.
- Sacrificing other assets, such as home and car, may increase the probability that you’ll be able to retain ownership of your company.
- Consider a buy-sell agreement that could prevent your spouse from acquiring ownership.
There are many other solutions to consider, and it’s important to speak with an experienced family law attorney who understands business valuations and how businesses are included in Maine divorce proceedings.
Dividing the Business Interests on Divorce or Dissolution
Remember, when starting the divorce processes, your marital property may be subject to equitable distribution considerations in Maine family courts. As such, if aspects of your business are considered marital property, the court may divide that interest between you and your spouse.
Like most states, Maine has an equitable distribution or common law system of marital property. Regarding the business, the Maine family court may consider the following circumstances when determining marital property:
- The contribution of each spouse to the business. For instance, if you started the business, but your spouse helped expand it, the courts may divide the business assets based on these contributions.
- The value of the business set aside for each spouse.
- The economic circumstances of each spouse at the time of the property division.
After the courts determine the extent of marital property, you may need to get your business valued before it can be fairly distributed. Always remember that in Maine family courts, agreements between you and your spouse can supersede the usual method of distribution. In this case, mediation is highly recommended for any dispute resolution.
Your Options for the Business in a Divorce
You have many options for your business during the divorce. First, you need to consider between court litigation and mediation, and second, you may need to figure out what to do with the business and business interestes, including:
The Buy Out
One of the most common methods for the business in a divorce case is the “buy out.” Essentially, in this scenario, one spouse buys the other spouse’s interest in the business. For instance, a married couple planning for divorce (Paul and Mary) agree that the value of the jointly-owned business is $500,000. Mary plans on moving away after the divorce, while Paul wants to continue running the business. As such, Paul may owe Mary $250,000 for her to get half of the practice.
Keep in mind that the buy out only works if the buying spouse has enough cash or assets to satisfy the selling spouse. Often, a the buy out results in a lump sum settlement, though structured payments may be acceptable as well as trading business interest for other assets, such as the car, an IRA or 401K, or another.
Instead of selling the business after the divorce, a divorcing couple can choose to continue co-owning the business. This situation is not a viable solution in high-conflict divorces, and it will only work when the divorcing couple remain amicable and able to work with one another (and also remain in each other’s vicinity).
Another version of co-ownership occurs when one spouse continues to run the business while the other spouse agrees to accept payments from future business proceeds. This method can be risky, however, especially if the business stops turning a profit in the future.
Sell the Business to a Third Party
When the above-mentioned models don’t work or fit with your circumstances, a third option is to outright sell the business and its interests to a third party. This is perhaps the best way for both spouses to move on and gain some money for a clean start. However, keep in mind that selling a business can take time, and it’s generally advised to not quickly sell the business with the first offer you receive; additionally, if you and your spouse disagree on the value of the business, trying to sell the business could ignite further conflict.
Call the Schultz Family Law Firm in Portland Today!
Divorcing when a business is involved can be a long-winded, complex affair with a lot at stake. Fortunately, by contacting Portland ME family law attorney Susan Schultz of the Schultz Family Law firm, you can acquire a knowledge, compassionate attorney with a successful record of helping individuals like you.