When you own a business, divorce is always more complicated, unless you’ve thought ahead and protected the business with a prenuptial agreement. However, for business owners facing divorce in Louisiana, there is an extra layer of complication because Louisiana abides by community property guidelines when dividing assets and liabilities in a divorce.
Louisiana is among only a few states that use community property guidelines, but these can make a big difference. In states where community guidelines are not used, spouses can choose to divide up property however they see fit, as long as a court acknowledges that the division is “equitable.” However, division of marital property in community property states, often including businesses, means that spouses must divide property “equally,” which may make it more difficult to reach a legally sound compromise.
If you face the difficult task of divorcing as a business owner, be sure to seek out strong legal counsel from an attorney who understands valuing complex assets like businesses, as well as navigating divorce laws in Louisiana. Proper legal counsel ensures that you can approach your divorce with a strategy to achieve your goals and begin building a new life on the other side.
Is your business marital property?
For most business owners facing divorce in Louisiana, this is a crucial question. If you business is marital property, then your strategy is wildly different from a scenario where it is separate property.
Sometimes, however, this is not very clear. You may have grounds to claim that the business is separate property if you can demonstrate that your spouse does not have a claim to its value. This means keeping your personal and business lives as separate as possible. If you hope to claim that the business is not marital property
- Do not let your spouse work in the business, or remove him/her if he/she already does
- Do not mix business funds and personal funds
- Do not underpay yourself and risk your spouse claiming you withheld income from the household
- Do keep excellent records for your business
Do you know what the business is worth?
If you find yourself attempting to save your business from divorce, you still have some options. You may have ways to offer your spouse other assets to offset his/her claim on the worth of the business. To do this, you must first know what the business is actually worth.
A professional business valuation establishes just what your business is worth, and how much of a liability it is. Like many complex assets, businesses are not simply valuable, they are like a machine that can either prove very lucrative or very costly, depending on many factors. Make sure that you know your business’s true value so that you do not offer your spouse more than he/she truly deserves.
An experienced attorney can evaluate your circumstances and build a strong strategy based on your needs and goals, while protecting your rights throughout your divorce and beyond.