In equitable division states like Mississippi, marital property will be divided fairly and equitably between spouses going through a divorce. If you are a business owner, you may be wondering whether your soon-to-be ex is entitled to part of your business. To make this determination, the court will first have to decide whether the business should be considered marital or separate property by answering several questions, including the following:
- When was the business started? Many people start a business prior to getting married, whereas others start the business during the marriage. A business started by one spouse prior to the marriage will likely be classified as separate property unless the other spouse has become involved in the business in some way.
- How is the business funded? If you run the business but are using marital funds to contribute to the business, it is likely that the business will be considered marital property.
- Is your spouse contributing to the business? If your spouse is contributing to the growth of your business (e.g., working for the business), it will likely be considered marital property, even if you originally started the business.
If the court determines that your business is marital property, it will determine the value the business based on submitted appraisals and determine how best to proceed. A few options are:
- Selling the business and dividing the proceeds between you and your spouse.
- Buying out your spouse’s interest in the business.
- Having your spouse buy out your interest in the business.
- Continuing to run the business together even after the divorce is finalized.
It is in your best interest as a business owner to protect the company you worked hard to establish. A family law attorney in your area can answer any questions you have about property division.