How To Handle Business Ownership In A North Carolina Divorce
A couple’s shared business may complicate divorce proceedings. Here’s how to handle business ownership in a North Carolina divorce.
North Carolina has implemented laws to protect business owners in a divorce. Owning a business takes a lot of time and energy, and thus requires careful division in divorce proceedings.
Related: Military Divorce in North Carolina: The Basics
Business Ownership And Divorce In North Carolina
Whether one or both parties own a business, a divorce may threaten its success. Spouses must have an in-depth understanding of how a divorce may impact the business’ functionality. Consulting with an attorney may be a crucial asset throughout the divorce.
Equitable Distribution In North Carolina
North Carolina honors “equitable distribution,” meaning a court must divide property spouses gained throughout a marriage equitably, not equally. Property a spouse owned before marriage is their individual property and not subject to “equitable distribution.”
Exceptions To Equitable Distribution In North Carolina
Spouses may protect their assets from “equitable distribution” by forming a prenuptial or postnuptial agreement. An attorney may review the agreement to decipher which assets the court will distribute, versus which property categorizes as separate property.
Related: North Carolina Spousal Support Laws: Calculating Alimony
How Does North Carolina Split Shared Businesses in Divorce?
If two spouses formed a business while married, and did not decipher ownership in a prenuptial or postnuptial agreement, the business may be subject to “equitable distribution.”
To determine whether the business is equitable, a North Carolina court will consider:
- Asset or debt values,
- Assets and debts are divided equitably, perhaps not equally,
- Each spouse’s assets and debts, and
- Which assets or debts are separate, marital, or divisible.
What Does The Court Consider When Determining Equitable Assets and Debt?
When a court divides a company’s assets and debts amidst the owner(s)’ divorce, it will consider each party’s:
- Age,
- Health,
- Income,
- Role within the business and
- Any other relevant information.
Along with each spouse’s personal information, the court may consider the business’s legal structure and assets when deciding “equitable distribution:”
Outcomes of Business Distribution in a North Carolina Divorce
If spouses cannot agree on business distribution on their own, they must bring their case to a court to decide their business’s “equitable distribution.”
- The court may take one of three routes:
- One spouse keeps the business after buying the other out,
- Both spouses sell the business and split the profit, or
- Both spouses continue owning and operating the business together after divorce.
A lawyer may help determine the business ownership outcome(s) throughout a divorce. Ensuring a professional handles the parties’ shared business ownership may help ease the divorce process.
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If you or a loved one would like to learn more about business ownership in a North Carolina divorce, get your free consultation with one of our divorce attorneys today!