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Can a small business be considered marital property?

On Behalf of | Jun 24, 2019 | High Asset Divorce |

If you own your own business and are going through a divorce, you may be wondering if your business can be considered marital property.

The short answer is: yes. Small businesses are like any other asset in a marriage. If a judge deems your business to be marital property, then they may divide the assets between you and your spouse. However, every situation is different.

Separate vs marital assets

The first thing to determine is whether the business is separate property of the owner or shared property of the marriage. Generally, courts consider any assets spouses bring with them into the marriage to be separate property. They consider any assets—including businesses—obtained by either spouse during the marriage as marital property.

Is my business separate?

Businesses are assets and will be subject to these guidelines. However, there are a few factors that can change this:

  • Investments: If you’ve made any investments into the business with shared marital assets—even if you started the business before you got married—a judge may deem a portion of the business to be marital property.
  • Transfers: If you transfer a portion of the business—as a purchase or as a gift—to your spouse, that portion is no longer considered your separate property.
  • Income/lack of income: Any income you allocate yourself from the business is a marital asset. Furthermore, if you don’t give yourself a salary and instead reinvest any earnings back into the business, you may run into more issues. Your spouse could argue that you owe assets to the marriage, because your income—which should be marital property—went to your business instead of the household.

Even if your business is marital property, you as the owner can still keep your business intact. Because Missouri is an equitable distribution state, the judge will divide marital property based on what they think is fair, and not on a 50-50 basis.

Furthermore, you may be able to compensate your spouse for their portion of the company with other marital assets, like the house or a larger piece of the retirement plan.

It is important to remember that no two divorces are the same. Variables from different judges’ perspectives, financial situations and relationship dynamics all play a part in a divorce. It is important to have an experienced attorney to help guide you through the uncertainty and help you take control of your life.

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