Every year, more than 600,000 new businesses are opened. Although the survival rate for small to mid-sized companies is not high, many do thrive and become lucrative revenue streams. However, when the founder or co-founder of a business files for divorce, complications arise. Courts will consider the business’s assets and liabilities to fairly and equitably divide all property among the divorcing spouses. Business owners should seek the counsel of a family law attorney on how to navigate this aspect of a divorce settlement.
Businesses Run by Both Spouses
If a family business is run by the divorcing couple, both spouses most likely spent the same amount of time getting the company started. A court may decide to give equal shares of the company to each party. In certain situations, divorcing couples may decide to keep working as usual, putting the company needs above their own. In other situations, one spouse may sell their share to the other, or sell the share to a third party.
Businesses Run by One Spouse
If one spouse founded the business, it might seem reasonable to assume that the founding spouse will receive all the assets from the business during a divorce. Yet, that is not always the case. Pennsylvania family law courts take many aspects of running a business into consideration, including the support offered from the spouse who was not involved in the company. For instance, a stay-at-home mother might have handled all the household responsibilities so her husband could launch the business. Consequently, some of the assets from the business may be directed to her.
Other Divorce and Business-Related Considerations
Determining which party started and ran the business is only one aspect of how businesses can affect a divorce. Other situations that complicate matters further include:
- Whether the family of one spouse funded the startup phase of the business
- Who else owns part of the business, such as a partner outside of the family
- How well the business is performing
- If the business has been placed into a trust
- If the business is up for sale
- Whether the business was brought into the marriage by one party, rather than started during the marriage
- Whether the business increased significantly in performance during the marriage
Chester County Family Law Attorneys at Eckell Sparks Help Clients with Business-Related Decisions in Divorce
If you are planning a divorce and have a family-owned business, contact a Chester County family law attorney from Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. Our lawyers can help you reach a fair, equitable settlement or arrangement. Contact us online or call us at 610-565-3701 for an initial consultation today. Located in Media and West Chester, Pennsylvania, we serve clients from the surrounding areas, including Delaware County, Chester County, and Montgomery County.