Certain resources can make divorce proceedings far more challenging to navigate. Individuals with higher net worth can usually anticipate more potential for conflict when they decide to divorce. Frequently, business owners experience relatively complex and contentious divorces.
The combination of a high standard of living and stressful career demands can lay the foundation for a very difficult divorce process. That being said, individuals anticipating a potentially contentious divorce because they are business owners can prepare in advance to navigate common challenges.
Disputes about business ownership
The spouse who started the business or currently runs it may view it as their separate property. They may expect to retain sole ownership of the company. Particularly in cases where an individual started the business before marriage or inherited it from a family member, they may expect to keep the business as their separate property if they divorce.
However, reinvesting marital resources into the business can constitute commingling and raise questions about how much of the business’s equity might be subject to division.
Conflicts about addressing equity
In some cases, spouses may disagree about what the business is worth. They may potentially reach vastly different figures for the business’s valuation. The more valuable the business is, the harder it may be to balance out retained equity with other marital assets. Business owners who want to retain sole ownership of their companies often have to make concessions in other areas of the divorce.
Challenges related to support
Unpredictable business income can make it difficult to fairly calculate financial support obligations. Child support can be much more difficult to calculate when income is variable. Parents may need to compromise to ensure that the order is fair and appropriate. There can also be disputes related to spousal support or alimony. Particularly in scenarios where the spouse requesting alimony used a business valuation method that factors in future business earnings, using that same income to calculate alimony obligations could be unfair.
Business owners often need help with asset valuation, negotiations and numerous other challenges that may arise when they divorce. Securing proper support when preparing for divorce as a business owner can help people protect the organizations that they run and prepare for the best possible life after divorce.