Even in the best circumstances, divorce in Minnesota can be very complicated, with layers of emotions, uncertainties and, sometimes, a sense of relief. At its core, it deals with the legal and financial split between couples. This includes your savings, debts and businesses, as well as parenting time if you have kids. By understanding and preparing for what’s to come, it may be much easier to deal with the process.
Business as a marital property
In Alabama, when it comes to property division during divorce, the family law court must first identify which of your assets are marital or separate. Marital property is any property either spouse obtained during the marriage. This includes business assets, regardless of whether the business is a corporation or not.
Generally, Alabama divorce laws presume all income earned and all property acquired during the marriage to be marital property, even if it’s in one spouse’s name only. The court will look at the following factors when classifying your business:
- How and when you or your spouse acquired the business
- Whether the asset has increased or decreased in value since you or your spouse acquired it
- The source of funds used to acquire the asset
- The purpose for which you acquired the business
The courts will then follow the equitable distribution model when dividing that business. This means that the judge will distribute your assets in a way that is fair but not necessarily equal based on your unique circumstances.
Potential impacts on your business
Divorce can affect your business’s day-to-day operations because you may have to make some changes to accommodate your new circumstance. For example, if the court awards your spouse a substantial share of your company, giving them a voice on your board, things may get complicated when it comes to decision-making. Also, on a more personal level, divorce can be emotionally and mentally draining, impacting your work performance.
Separation may also affect your business assets. If your spouse were to claim a portion of your business assets in the divorce, it could have a significant impact on your company’s finances.
The good news is you can always prevent these negative impacts from happening to your business. For example, you could set everything straight through a marital agreement or buy out your spouse’s share in the company when the split is inevitable.