Can I Be Protected From My Spouse’s Business Debt?
Oftentimes, a business is awarded by the court or by agreement between the parties to one spouse during a divorce, and when this occurs, the business debts are awarded to the individual that obtained the business. Generally speaking, as long as the business is incurring the debts in the name of the business and the other spouse is not using those debts as collateral for marital assets, then the spouse will be protected from business liability. Of primary concern is business liabilities especially federal tax-related debt; if this is the case, a tax or business attorney is needed to further shield the other party from the business debts even after the dissolution of marriage.
If I Own My Business With Other People, How Might My Divorce Impact Their Shares?
If acquired during the course of the marriage, businesses will be subject to equitable distribution in a divorce. If you owed 50% of the Business and a third party owed 50% of the business generally the Husband and Wife would be awarded 25% each of the equitable distribution and the third party would still own 50%. The Court does not have the power to force the sale of the business or liquidate the business unless the business is named as a party to the Dissolution of Marriage. However, valuing the business can be problematic. Therefore a business valuation or forensic accounting may need to be performed in order to determine the value of the business and the equitable distribution.
How Do I Prepare An Exit Plan Before Filing For Divorce?
Exit plans are made on a case-by-case basis and the Law Firm of Eve McClurg can assist you in this process during your free consultation. When I help clients create exit plans, I first determine what type of issues are present in the case and what strategies should be employed in order to properly exit the marriage depending on the circumstances. Issues for example as domestic violence, money and children needed to be discussed. When filing for divorce, mandatory disclosures and financial affidavits will be necessary, so gathering documents (e.g. tax returns, bank statements, credit card statements) is helpful. It may also be wise to determine how to secure funds to use during the proceeding or for a new living arrangement.
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