On behalf of Cooper, Tanis & Armas, P.C. posted in divorce on Friday, April 8, 2016.
Starting a business is a major undertaking, and the last thing Colorado entrepreneurs likely to not want to do is to lose a major portion of their interests in it during a divorce. Those who are single but are in a relationship that may lead to marriage down the road may want to consider a prenuptial agreement in order to remain in control in the event of a future divorce.
Without a prenuptial agreement stating otherwise, a company owner’s spouse is eligible for half of the increase in value of a business that took place during a marriage, as it is likely considered to be marital property. If a business was worth $500,000 at the start of a marriage and has increased in value to $1 million at the time of a divorce, the other party may be entitled to receive $250,000.
A prenuptial agreement can state that a business is not a marital asset and not part of the asset division process. However, to ensure that the prenup does not lose strength or become invalidated, shared marital funds should not be used to invest in or pay for things related to the business. People should also determine how or if they will share debts to avoid business assets being used to pay off the other person’s creditors.
When a couple gets a divorce, there are a number of financial issues that they will need to decide, even if neither person owns a business. Property division will require both individuals to split up any assets they have acquired during the marriage. When there is no prenuptial agreement, a divorcing spouse may want to have legal help in negotiating a settlement.