If you own a business in Pennsylvania, getting a divorce could significantly affect it. Here’s what to look out for to better protect yourself and your interests.
The business started before marriage
If you started your business before you got married, then it is likely that the court will rule it is separate property. But there are exceptions. If your spouse did anything to contribute to your business, like investing in it, helping you make decisions, or working there, they might be entitled to a portion of the company.
The business started during your marriage
In Pennsylvania, when you start a business during your marriage without having any protection in place, the family law considers it marital property. This means that it will be subject to equitable distribution when you divorce. You and your spouse will each get a share of the business based on several factors, including its value, each of your contributions to it and whether one of you needs it more than the other.
The value of your business could be affected by your divorce in several ways:
- If you have to give your spouse a portion of it as part of the property division process, that will obviously lower its worth.
- If the divorce causes any negative publicity for your business or affects its reputation, its value could be affected.
- If going through the divorce takes up so much of your time and energy that you can’t focus on running the business, that could lead to a decline in its value as well.
Furthermore, if you and your spouse are jointly liable for any business debts, you will both be responsible for paying them off even after the divorce. This can put a financial strain on you, making it challenging to keep the business afloat.
The best way to protect your business in a Pennsylvania divorce is to have a pre-or post-nuptial agreement before marriage. This will allow you to specify what will happen to the business upon divorce. If you don’t have an agreement, you may still try to negotiate with your spouse out of court. If you can’t, the judge will ultimately decide for you.