Business Owners & Divorce in Charlotte

Divorce presents unique and complex challenges for business owners that go beyond the personal. The business you’ve worked hard to build can become a central point of contention, raising the stakes financially and professionally. Navigating this process requires careful planning and a deep understanding of North Carolina’s laws to protect your interests.

At Waple & Houk, PLLC, our family law attorney guides business owners through divorce. We recognize the stress and uncertainty involved when your livelihood is on the line. Our goal is to help you achieve an amicable resolution that safeguards your business’s future.

How Is A Business Divided In A North Carolina Divorce?

In North Carolina, marital assets and debts are subject to “equitable distribution.” This legal principle dictates that property will be divided fairly between spouses, though not necessarily in an equal 50/50 split. A business is often one of the most significant assets to be considered. The court’s primary task is to determine how much of the business is marital property subject to division.

This process involves classifying the property, valuing the business and deciding on a method of distribution. Each step is critical and can significantly influence the final divorce settlement.

Is My Business Considered Marital Or Separate Property?

One of the first questions in a business-related divorce is how to classify the business. Distinguishing between marital and separate property is of paramount importance.

• Marital Property: This includes any assets acquired or developed by either spouse during the marriage, up until the date of separation. A business started during the marriage is generally presumed to be marital property, regardless of whose name is on the legal documents.
• Separate Property:  This encompasses assets owned by a spouse prior to the marriage, as well as those acquired through gifts or inheritance during the marriage. A business owned before the wedding may start as separate property.

However, a separate property business can become partially or entirely marital. This can happen if marital funds were invested in the business or if the non-owning spouse contributed to its growth. These contributions don’t have to be direct; for example, if one spouse managed the household, allowing the other to dedicate more time to the business, their efforts could be considered an indirect contribution to the business’s appreciation in value.

How Is The Value Of My Business Determined?

Accurately valuing the business is one of the most critical steps in a divorce. The court needs a clear financial picture to ensure a fair division. This is not a simple task and almost always requires the assistance of a professional business valuator.

A valuation professional will analyze financial documents, such as tax returns, profit and loss statements and balance sheets. They typically use one of three methods to determine the business’s worth:

• Income Approach: This method bases the valuation on the business’s future earning potential.
• Market Approach: This involves comparing the business to similar companies that have recently been sold.
• Asset Approach: This method calculates the net value of the company’s assets and liabilities.

How Can I Protect My Business During A Divorce?

Proactive steps can safeguard your business from the potential turmoil of a divorce. The most effective strategies are put in place long before a separation is on the horizon. A family law attorney can help you implement agreements that define how your business will be handled. Consider creating a prenuptial or post-nuptial agreement. These legal documents can specify that the business remains separate property, outlining exactly what will happen in the event of a divorce.

If you are already facing a divorce, an attorney can help you gather the necessary financial records, work with valuation advisors, and negotiate on your behalf to fight for your rightful share of the business you have worked so hard to build.

Let Us Help Protect What You’ve Built

Divorce is challenging, but when a business is involved, the complexities multiply. Understanding North Carolina’s equitable distribution laws and taking proactive steps are essential to protecting your professional and financial future. Waple & Houk, PLLC, offers the guidance and advocacy you need. We will help you navigate every stage of the process, from business valuation to final settlement, ensuring your rights and assets are protected. Contact our office today to seek a fair and sustainable outcome.