If you are a business owner going through a divorce, there is a good chance that your business will be treated as marital property and therefore subject to equitable distribution. So, what exactly does this mean? And can it be prevented? Read on to learn more.
What is equitable distribution?
Equitable distribution is the way that assets are typically divided in Massachusetts. This means that your assets are not simply split 50/50 between the two parties. Instead, they will be divided in a way that is fair to both parties. In order to determine this, the court may examine some of the following factors:
- Your and your spouse’s age and health
- Your and your spouse’s earning potential
- Whether one spouse furloughed their goals in support of another spouse pursuing theirs
- Whether one spouse paid for the other spouse’s education
- Your and your spouse’s yearly income
- The value of your property
- The amount both you and your spouse contributed to the marriage
- Your child custody agreement
- Any other factor the court deems relevant
What is marital property?
Marital property will be subject to equitable distribution. However, separate property will generally be exempt from distribution. Separate property may include property acquired before the marriage, inheritances, gifts, etc. In most cases, a business will be considered marital property, and therefore subject to equitable distribution.
How can I protect my business from divorce?
In order to distribute your business, the court will need to determine its true value. To do so, they may bring in financial experts. It is important to know that if you attempt to hide any assets, the IRS may get involved, leading to serious legal trouble. Instead, consider creating a prenuptial agreement. A prenuptial agreement is a legal document that determines how your and your spouse’s assets should be divided in the event that your marriage comes to an end. In a prenup, you can outline what should happen to your business in the event of a divorce. It is important to know that a prenuptial agreement must be created before you get married. However, you can still create a postnuptial agreement. This is the same document, created after the wedding, rather than before.
If you are getting divorced with a business in Massachusetts, you will need an experienced attorney on your side. Contact our firm to speak with a skilled divorce attorney today.
Contact our experienced Bristol County firm
If you need help through a contested divorce or with any other family law matter, contact The Law Offices of Cynthia L. Hanley, P.C. for a consultation today.