Small business owners may struggle with attempts to manage their personal and professional responsibilities. When an entrepreneur’s marriage heads for divorce, things may become even more complicated. Georgia divorce law addresses matters related to asset distribution, so both spouses may have questions about how the business’s valuation will affect the outcome of their divorce.
Divorce, marital assets and small businesses
Georgia is not a community property state, but property acquired during the marriage is subject to equitable distribution. In other words, even though one spouse had nothing to do with the enterprise’s founding or growth, the courts could still divide the business as marital property. Companies founded long before the marriage commenced are also subject to equitable distribution rulings based on growth since the marriage began.
Things could become even more challenging when a spouse is not the sole owner. What if several members of the family own a stake? Are there partners, silent or active, who own percentages? Small business owners may find divorce proceedings overwhelming and potential judgments far-reaching, but experienced attorneys may help their clients explore solutions to the situation.
Addressing the small business in a divorce
When both spouses own a stake in the company, one spouse may buy the other out. Once the buyout ends, the small business might no longer factor into the divorce depending on the buyout terms.
When only one spouse owns the business, agreements may take place in an amicable divorce settlement. For example, one spouse may keep the company while the other receives a house and a set amount of alimony.
In some scenarios, the courts could order the business to go up for sale. Proceeds may then be split equally. A spouse heavily involved in a business might not want to see such an outcome, so he or she may look for a different solution.
Divorce laws bring concerns for small business owners. Spouses wishing to protect their business interests may need to consult with an attorney about how to do so.
