If you are an entrepreneur who is considering a divorce, you may have questions about what will happen to your company. Can you keep your business, or will you have to sell it? Does your spouse have any claim to its value?
During the divorce process in Colorado, you must divide most assets that you acquired during the marriage. The impact on your business will depend on whether it is marital or separate property.
Marital vs separate property
Separate property includes those assets you owned before your marriage. Marital property refers to most things of value acquired during the marriage. This can include real estate, vehicles, bank accounts, retirement accounts and household goods. Typically, increases in the value of the separate property that occur after your nuptials are also marital property.
Your spouse has an equitable claim on your business if you started it after tying the knot. If your company was already operating before your marriage, it is most likely considered a separate asset.
Even if you owned your business prior to your wedding, some additional factors could impact whether it is subject to property division. For example, your spouse may receive a portion of any rise in value that occurs during the marriage.
Additionally, your company could be a commingled asset if your spouse made significant financial or operational contributions to the business or if your household was primarily supported by its income.
While divorce can be complex for any couple, you have further complications to deal with as an entrepreneur. Make sure to seek a valuation of your business and keep good records for the divorce process.