3 Tips to Protect Your Business During Divorce

By Thomas Petrelli, Jr.  Jul. 13, 2020 12:35p

If you built a business and have decided to get divorced, you may have heard that your company could be a marital asset to be divided between the two of you.

I know what you’re thinking: Wait, it’s solely my business and not my spouse’s – doesn’t that mean I get to keep it? Unfortunately, unless the company is considered separate property (see below) or excluded with a prenuptial agreement, it technically belongs to the two of you. Of course, you do not want to split the value of something you created and worked hard to grow on your own. But there are a few ways you can position yourself to keep the company fully in your possession after the divorce is finalized.

1. Know Your Right to Separate Property

Your state has criteria for what constitutes individual or separate property, meaning assets that remain in the possession of one spouse during divorce. For example, an asset that one spouse acquired before marriage is typically separate and will not be divided. But if that asset’s value increased during your marriage, the additional value could be marital property. So, if you started your business before marriage, there is a good chance it will be separate property, but if your business grew while you were married, the value of that growth could be marital property.

2. Don’t Be Afraid to Negotiate

Even if your business is marital property, you can work with your lawyer to try to keep it in full after divorce. It’s all about negotiation. “Whether spouses are working to negotiate outside of court or need to litigate the divorce, their attorneys can work to divide the assets in a way that satisfies both parties in the end,” said Philadelphia divorce lawyer Thomas J. Petrelli, Jr. So, if keeping the company in full is more important to you than, say, the share of your house’s value, you could try to trade that value for an asset your spouse would rather have in full.

“When navigating divorce, it’s all about finding a division that makes sense,” Petrelli said. “If that means one spouse gets the business in full and the other spouse gets the car, or the vacation home, or another asset with equal value, that trade-off can be worked out in the agreement.”

3. File a Prenuptial Agreement if You’re Not Married Yet

If you are reading this article and are not married yet, consider filing a prenuptial agreement. It’s not the most romantic topic to discuss with your fiancé, but it is basically just another insurance policy. You have health insurance and car insurance to protect against the unexpected; similarly, a prenup is there to protect your assets just in case. And if you have a business, that legally binding document could state that your company would be separate property if you divorce down the road.

When you’ve decided to move forward with divorce, the best thing to do is hire an attorney with experience in resolving cases involving a business. You’ll discuss your goals and the obstacles you may face, and you should feel confident that you will be able to keep the business you built at the end of the divorce process.

3 Things to Consider About Child Support During Divorce

Besides custody, one of the most nerve racking stages of divorce for parents is finding out who will pay child support and how much they’ll be required to pay. Here are three things to know.

1. Determining Child Support is Pretty Much Out of Your Hands

The first thing to know about child support is that it’s not up to you, the parents, to decide how it should work. The court will evaluate your children’s needs and your finances to determine the amount of support and who must provide it. Even though the support decision is up to the court, your attorney can provide an estimate early on. “While divorcing spouses do not have much control over the court’s decision regarding child support, they do not have to be in the dark about what to expect,” said Philadelphia divorce lawyer Thomas J. Petrelli, Jr. “Family law attorneys can calculate a decent estimate ahead of time, so you’ll know what you will likely see in the agreement.”

Many divorce firms use software that applies formulas based on the normal costs to raise a child today. The equation also factors in a variety of details that are unique to each family, such as: the number of minor children and their needs, each parent’s income and ability to pay for the children’s needs, and the family’s standard of living before divorce. While it’s impossible to predict the court’s final support order with absolute certainty, this ballpark figure can help put parents’ minds at ease in the meantime.

2. There’s Some Connection Between Custody and Child Support

Child support is a payment that one parent pays the other to properly support their minor children’s needs after divorce. The payments are meant to cover food, clothing, medical and dental expenses, education costs, and other life expenses.

As a rule of thumb, the parent with more physical custody of the children will likely be the one to receive child support, as their provision of custody serves as their version of support. Still, an equal shared custody agreement does not get parents off the hook for paying child support; one parent will owe some amount of support to the other.

3. If Life Changes, Parents Can Ask the Court for an Order Modification

If one parent’s financial circumstances change after divorce, he or she can submit a request to the court to amend the original child support order. It’s important to speak with a family law attorney about requesting a modification and to do it correctly through the legal system. Even if both parents agree to a change, it’s a bad idea to stray from what’s in the agreement before the court modifies it.

“Child support is going to be a factor in any divorce agreement that involves kids,” Petrelli said. “The best thing to do is to speak with an experienced lawyer early on to relieve the stress of wondering what will happen.”

3 Tips to Protect Your Business During Divorce

If you built a business and have decided to get divorced, you may have heard that your company could be a marital asset to be divided between the two of you.

I know what you’re thinking: Wait, it’s solely my business and not my spouse’s – doesn’t that mean I get to keep it? Unfortunately, unless the company is considered separate property (see below) or excluded with a prenuptial agreement, it technically belongs to the two of you. Of course, you do not want to split the value of something you created and worked hard to grow on your own. But there are a few ways you can position yourself to keep the company fully in your possession after the divorce is finalized.

1. Know Your Right to Separate Property

Your state has criteria for what constitutes individual or separate property, meaning assets that remain in the possession of one spouse during divorce. For example, an asset that one spouse acquired before marriage is typically separate and will not be divided. But if that asset’s value increased during your marriage, the additional value could be marital property. So, if you started your business before marriage, there is a good chance it will be separate property, but if your business grew while you were married, the value of that growth could be marital property.

2. Don’t Be Afraid to Negotiate

Even if your business is marital property, you can work with your lawyer to try to keep it in full after divorce. It’s all about negotiation. “Whether spouses are working to negotiate outside of court or need to litigate the divorce, their attorneys can work to divide the assets in a way that satisfies both parties in the end,” said Philadelphia divorce lawyer Thomas J. Petrelli, Jr. So, if keeping the company in full is more important to you than, say, the share of your house’s value, you could try to trade that value for an asset your spouse would rather have in full.

“When navigating divorce, it’s all about finding a division that makes sense,” Petrelli said. “If that means one spouse gets the business in full and the other spouse gets the car, or the vacation home, or another asset with equal value, that trade-off can be worked out in the agreement.”

3. File a Prenuptial Agreement if You’re Not Married Yet

If you are reading this article and are not married yet, consider filing a prenuptial agreement. It’s not the most romantic topic to discuss with your fiancé, but it is basically just another insurance policy. You have health insurance and car insurance to protect against the unexpected; similarly, a prenup is there to protect your assets just in case. And if you have a business, that legally binding document could state that your company would be separate property if you divorce down the road.

When you’ve decided to move forward with divorce, the best thing to do is hire an attorney with experience in resolving cases involving a business. You’ll discuss your goals and the obstacles you may face, and you should feel confident that you will be able to keep the business you built at the end of the divorce process.

3 Things to Consider About Child Support During Divorce

Besides custody, one of the most nerve racking stages of divorce for parents is finding out who will pay child support and how much they’ll be required to pay. Here are three things to know.

1. Determining Child Support is Pretty Much Out of Your Hands

The first thing to know about child support is that it’s not up to you, the parents, to decide how it should work. The court will evaluate your children’s needs and your finances to determine the amount of support and who must provide it. Even though the support decision is up to the court, your attorney can provide an estimate early on. “While divorcing spouses do not have much control over the court’s decision regarding child support, they do not have to be in the dark about what to expect,” said Philadelphia divorce lawyer Thomas J. Petrelli, Jr. “Family law attorneys can calculate a decent estimate ahead of time, so you’ll know what you will likely see in the agreement.”

Many divorce firms use software that applies formulas based on the normal costs to raise a child today. The equation also factors in a variety of details that are unique to each family, such as: the number of minor children and their needs, each parent’s income and ability to pay for the children’s needs, and the family’s standard of living before divorce. While it’s impossible to predict the court’s final support order with absolute certainty, this ballpark figure can help put parents’ minds at ease in the meantime.

2. There’s Some Connection Between Custody and Child Support

Child support is a payment that one parent pays the other to properly support their minor children’s needs after divorce. The payments are meant to cover food, clothing, medical and dental expenses, education costs, and other life expenses.

As a rule of thumb, the parent with more physical custody of the children will likely be the one to receive child support, as their provision of custody serves as their version of support. Still, an equal shared custody agreement does not get parents off the hook for paying child support; one parent will owe some amount of support to the other.

3. If Life Changes, Parents Can Ask the Court for an Order Modification

If one parent’s financial circumstances change after divorce, he or she can submit a request to the court to amend the original child support order. It’s important to speak with a family law attorney about requesting a modification and to do it correctly through the legal system. Even if both parents agree to a change, it’s a bad idea to stray from what’s in the agreement before the court modifies it.

“Child support is going to be a factor in any divorce agreement that involves kids,” Petrelli said. “The best thing to do is to speak with an experienced lawyer early on to relieve the stress of wondering what will happen.”