Property division involving business may spark conflict

| Jul 13, 2018 | Property Division

Divorce is one of the most difficult experiences a person may go through both emotionally and financially. However, if a divorcing spouse owns a business and has a business partner, this only complicates the divorce process. Here is a look at how businesses are handled when it comes to property division during divorce proceedings in Massachusetts.

Property division remains one of the most contentious aspects of divorce proceedings. This process requires the divorce court to determine which debts and assets are part of a couple’s marital estate and which ones are separate property. Businesses oftentimes fall under the marital estate category, which means exes might be entitled to shares in them.

A divorce court may view a company as marital property if it was formed after a couple got married, particularly if the business owner’s spouse played a role in operating the company. In this case, the owner’s spouse may receive half of the business partner’s stake in the venture. If the owner and his or her partner created the company before the owner got married, the family law court will probably still decide that the owner’s spouse must receive half of the venture’s appreciation in value.

The best way in which to protect a business venture during divorce is to create a prenuptial agreement prior to the wedding. This type of agreement explains how property division involving businesses and other assets should be addressed in the event that a couple gets divorced. However, if a couple in Massachusetts never created a prenuptial agreement, they can still pursue a mutually satisfactory divorce settlement through informal negotiations, thus avoiding further court intrusion.