What Happens to My Business If I Get Divorced in North Carolina?

Business Property During a Divorce

Divorce is an emotional process that can be even more stressful and complicated when a business is involved. If you’re a business owner going through a divorce, you may have concerns and uncertainties about what could happen to your company as you work to separate your finances from your spouse. There are many important questions to ask before finalizing your divorce, and in this blog, we will help you find clarity on the subject.

What Does Equitable Distribution Mean in a Divorce in North Carolina?

The first thing you need to know is that North Carolina is an equitable distribution state, which means that during a divorce, the court will divide marital assets and debts fairly, though not necessarily equally. Equitable distribution would include businesses started or acquired during the marriage.

Asset division follows a four-part process:

  • Identification: The first step in the process requires identifying a couple's assets and debts. These could include physical properties like houses and cars, financial assets like bank accounts, stocks, and retirement funds, as well as debts like mortgages, loans, and credit card balances. This step requires full disclosure from both parties.
  • Classification: Once all assets and debts have been identified, the court assigns classifications, determining whether a property is marital or separate property. Marital property refers to all assets and debts acquired or incurred during the marriage, regardless of whose name they are in. Separate property includes assets and debts one party had before the marriage or those acquired during the marriage as gifts or inheritances specifically to one spouse.
  • Valuation: After classification, the court assigns a monetary value to the marital property. This could involve hiring appraisers, accountants, or other financial experts to determine the current market value of assets like real estate, businesses, and personal property and the outstanding amount on any debts. The valuation date may be the date of separation, the date of filing of the divorce, or another date ordered by the court.
  • Distribution: In the last step, the court distributes the marital property between the two parties. While North Carolina is an equitable distribution state, it doesn't necessarily mean a 50/50 split. The court will consider various factors such as the duration of the marriage, the age and health of the parties, their income and earning potential, and their contributions to the acquisition, preservation, or appreciation of the marital property. The goal is to reach a fair, but not necessarily equal, division of assets and debts.

It’s important to remember that the specifics of this process can vary depending on the circumstances of your case and any state laws unique to it. Before going through this process, begin by consulting with a legal professional.

What Will Happen to Your Business in an Equitable Distribution State?

In North Carolina, business properties can be considered marital property if they were acquired or started during the marriage. Several outcomes are possible if you and your spouse jointly own a business. One spouse could buy out the other spouse's interest, or you could sell the business to a third party and split the proceeds. A business that one spouse started or acquired before the marriage is typically considered that spouse's separate property. However, if marital assets were transferred into the business or if the business appreciated in value during the marriage due to the efforts of either spouse, it could be subject to equitable distribution. An equitable distribution determination can be complex and depend on the specifics of each case. Therefore, it's crucial to consult with a knowledgeable attorney who can help navigate these complexities and protect your interests.

Can You Protect Business Property During a Divorce?

If you're concerned about the potential impact of a divorce on your business, there are steps you can take to protect it. For instance, a prenuptial or postnuptial agreement can specify how a business would be divided in a divorce. It's also crucial to maintain clear boundaries between personal and business finances. Commingling these can make establishing the business as a separate property harder. Divorce can significantly impact your business, but you can navigate this challenging time with careful planning and legal advice.

Contact the Divorce Attorney at David Self Family Law and Mediation Today

At David Self Family Law and Mediation, we understand the complexities of divorce, and our legal team can help you determine the best course of action for your business. Whether you’re unsure of your next steps or need help putting some protections in place in case you find yourself needing to file for a divorce.

Contact the divorce attorney at David Self Family Law and Mediation at (980) 223-3340 or online to schedule a consultation to review your case!

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