Going through a separation is hard enough, but coupled with the risk of losing what you have built, it can get more overwhelming. You have invested countless hours, late nights and years of hard work into building your business. Protecting your company is essential to securing your future.
In North Carolina, divorce does not automatically mean your business, or other high-value assets, are up for grabs. But it does mean you will need to take steps to secure them.
What is at stake in a North Carolina divorce?
North Carolina follows an “equitable distribution” model, which means marital property is divided fairly, but not always 50/50. The court considers factors such as each party’s income, contributions to the marriage (both financial and nonfinancial), the length of the marriage and each spouse’s future financial needs.
Valuing a business in divorce can be complex. If your business was started or grew during the marriage, the court may consider it a marital asset. If your spouse contributed indirectly, such as caring for children while you grew the company, the court may award your spouse a share of the business’s value. That could affect your ownership, control and share of future profits.
Do not overlook other high-value assets
The court divides high-value assets beyond the business when you and your spouse acquired them or when their value increased during the marriage. These often include real estate, like the family home or vacation homes, as well as retirement accounts such as 401(k)s, IRAs and pensions. The court also considers stock options and investment portfolios, especially when they involve future earnings or business ties.
Safeguarding what you have built
Here are some proactive ways to protect your business amid divorce:
- Business valuation: Get a clear understanding of your company’s worth before any negotiations begin. A professional appraisal helps clarify the true value of the business, which can strengthen your position during divorce proceedings and ensure a fair division.
- Financial tracing: Ask a financial expert to help you separate marital and nonmarital assets. This step is crucial if business or investment funds have been mixed with personal accounts.
- Buyout negotiation: Offer a fair trade to keep control of your business. If your spouse has a claim, consider exchanging their share for other assets of equal value.
- Avoid commingling: Keep business and personal finances separate to reduce the chance of your business being considered marital property. This includes using different accounts and documenting your transactions.
- Marital agreements: Use prenups or postnups to define expectations. These agreements can outline how businesses and high-value assets will be treated if the marriage ends.
By planning ahead, you can preserve your hard-earned gains, regardless of what comes next.
A future worth protecting
The end of a marriage does not have to mean losing everything you have worked for, but protecting your business and other high-value assets requires preparation and strategy. With the right legal support, you can work through divorce with peace of mind knowing you can protect your legacy.