my husband and i own our own company, the business is in my name only what rights does he have to the business if we divorced ...

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my husband and i own our own company, the business is in my name only what rights does he have to the business if we divorced

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DakotaLegal's picture

 

 
I’m going to start with the idea you want to keep as much of the company as possible, but based on a reasonable property settlement that’s also fair to both of you. As to the business being in your name, the key evidence will be answering the question: has your business ever been treated as your separate property? Most helpful to you will be if you owned the business before marriage. Proof of the business being “separate” property can be how you spent profits, or how you paid expense for the business? Here’s a court case showing how a wife proved she contributed most of the assets into a marriage: http://caselaw.findlaw.com/pa-supreme-court/1465232.html. You can use the same rules of “equitable distribution” for your business.
 
There’s always the possibility you may want to use your higher share of assets in the company to get some other marital property…such as a family home, car, or vacation property. But the idea will be the same: to be able to show “100%” of the business was (a) started by you, (b) used no marital assets, and (c) was designed and managed to be yours. To the degree these three assumptions are not 100% true, then an ex-husband may have some claim to the amount of contribution, which he supposedly made into the business, as your husband.
 
You may also want to negotiate based on your relative wealth, if alimony is an issue. You’ll want to see an accountant to set the best value on your business (usually, in Pennsylvania, the book value).
 
Though you indicate you have a successful business, which I’m assuming has significant assets, you may still be eligible for low-cost legal assistance. You might try to get a free consultation from a lawyer who specializes in divorces involving business assets. Try going through the Pennsylvania Bar referral system (LRS)… http://www.pabar.org/public /membership/lrsblurb.asp.
 
Let’s look at Pennsylvania law about property division involving a business.
 


  • Grounds For Divorce In Pennsylvania.

 
Though your question really focused on the business division, there may be issues raised by the reasons for divorce. Pennsylvania has kept elements of both “fault” and no-fault divorces. If there is fault, such as involving cruelty or abuse, then it may have an effect on some obligations. There are four basic types of divorce allowed in Pennsylvania. http://www.pabar.org/clips/divorceandseparation.pdf.
 
“Timing” may be crucial for your effective planning, and depending on the type of divorce you file. Yet, the crucial fact to know is that you absolutely must have an idea (assuming you file first) of what you think is fair. The reason is that once a divorce is granted, that’s usually “it” as far as dividing property. Only if your ex hid assets can you re-open a property settlement. Don’t be in such a hurry to protect your property that your Ex can hide his assets from a fair accounting. In Pennsylvania, the Judge has wide discretion to set the date of valuation for a business. http://www.aaml.org/sites/default/files/MAT207_1.pdf.
 

  • Can You Reach A Draft Marital Agreement?

 
Some spouses, when they feel their marriage is irretrievably broken, tell the other partner. As a result, the other spouse sometimes seizes an advantage in preparing for divorce. Though it may seem dishonest, get advice from a third party (if still possible) before discussing any details with your husband.
 
Here’s a case discussing how one couple reached an agreement outside of court, but then saw the wife forced into going to court to force the ex-husband to comply with the agreement. This is a warning against doing an agreement on your own, with no legal help. http://caselaw.findlaw.com/pa-superior-court/1267559.html.

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DakotaLegal's picture

 

 
I’m going to start with the idea you want to keep as much of the company as possible, but based on a reasonable property settlement that’s also fair to both of you. As to the business being in your name, the key evidence will be answering the question: has your business ever been treated as your separate property? Most helpful to you will be if you owned the business before marriage. Proof of the business being “separate” property can be how you spent profits, or how you paid expense for the business? Here’s a court case showing how a wife proved she contributed most of the assets into a marriage: http://caselaw.findlaw.com/pa-supreme-court/1465232.html. You can use the same rules of “equitable distribution” for your business.
 
There’s always the possibility you may want to use your higher share of assets in the company to get some other marital property…such as a family home, car, or vacation property. But the idea will be the same: to be able to show “100%” of the business was (a) started by you, (b) used no marital assets, and (c) was designed and managed to be yours. To the degree these three assumptions are not 100% true, then an ex-husband may have some claim to the amount of contribution, which he supposedly made into the business, as your husband.
 
You may also want to negotiate based on your relative wealth, if alimony is an issue. You’ll want to see an accountant to set the best value on your business (usually, in Pennsylvania, the book value).
 
Though you indicate you have a successful business, which I’m assuming has significant assets, you may still be eligible for low-cost legal assistance. You might try to get a free consultation from a lawyer who specializes in divorces involving business assets. Try going through the Pennsylvania Bar referral system (LRS)… http://www.pabar.org/public /membership/lrsblurb.asp.
 
Let’s look at Pennsylvania law about property division involving a business.
 


  • Grounds For Divorce In Pennsylvania.

 
Though your question really focused on the business division, there may be issues raised by the reasons for divorce. Pennsylvania has kept elements of both “fault” and no-fault divorces. If there is fault, such as involving cruelty or abuse, then it may have an effect on some obligations. There are four basic types of divorce allowed in Pennsylvania. http://www.pabar.org/clips/divorceandseparation.pdf.
 
“Timing” may be crucial for your effective planning, and depending on the type of divorce you file. Yet, the crucial fact to know is that you absolutely must have an idea (assuming you file first) of what you think is fair. The reason is that once a divorce is granted, that’s usually “it” as far as dividing property. Only if your ex hid assets can you re-open a property settlement. Don’t be in such a hurry to protect your property that your Ex can hide his assets from a fair accounting. In Pennsylvania, the Judge has wide discretion to set the date of valuation for a business. http://www.aaml.org/sites/default/files/MAT207_1.pdf.
 

  • Can You Reach A Draft Marital Agreement?

 
Some spouses, when they feel their marriage is irretrievably broken, tell the other partner. As a result, the other spouse sometimes seizes an advantage in preparing for divorce. Though it may seem dishonest, get advice from a third party (if still possible) before discussing any details with your husband.
 
Here’s a case discussing how one couple reached an agreement outside of court, but then saw the wife forced into going to court to force the ex-husband to comply with the agreement. This is a warning against doing an agreement on your own, with no legal help. http://caselaw.findlaw.com/pa-superior-court/1267559.html.