If you are navigating divorce as a business owner in Ohio, you need to understand how personal and business assets are divided. Understanding the basics of business asset division in a divorce in Ohio can help you better protect your company.
Are you wondering how you should prepare for divorce as a business owner in Ohio? If so, check out this article, where we will be discussing what an Ohio divorce for entrepreneurs looks like.
Is the Business Marital Property in Ohio?
In Ohio, divorce cases focus on equitable distribution of marital assets to create the fairest outcome for both spouses. In some cases, this can result in a 50/50 split; however, there are situations where this may not be the case.
Also, when you are getting a divorce, you need to determine what is marital property versus separate property. According to Ohio law, marital property is anything that was acquired during the duration of the marriage. Whereas as separate property is anything that was acquired before the marriage legally took place.
There are some instances where there may be exceptions to marital and separate property, depending on the circumstances.
Because of this law, any business that was founded during the marriage will be considered marital property. This applies, even if your spouse had little or nothing to do with how the business actually ran. But if the business was created before the marriage, it may be considered separate property.
One exception to this is if the business increased in value significantly after the marriage. This could result in it being labeled as marital property, especially if your spouse was involved in business matters.
How Are Business Assets Divided?
If it is determined that your business falls into the category of marital property, equitable distribution of business assets will apply. This can be a bit complex depending on the type of business, the percentage your spouse is getting, and the type of business assets you have.
Here are some examples of how business assets can be divided in a divorce:
- Sell the business and divide the profit.
- Provide an asset exchange where your spouse relinquishes their claim to any business assets.
- You buy out your spouse’s ownership of the business.
- Your spouse becomes a co-owner of the business.
Common Strategies to Protect Business Interests
Divorce as a business owner in Ohio can feel like a very overwhelming process, especially if you don’t want to lose your business. The good news is that there are several strategies you can use to better protect your business assets when you are going through with an Ohio divorce.
Here are some common strategies business owners can use to better protect the interests of their business during a divorce:
- Prenuptial or postnuptial agreements: It is always best to think ahead and create prenuptial or postnuptial agreements that take into account the future of your business. In these types of agreements, you can outline what happens to your business in case you and your spouse decide to get divorced in the future.
- Clear business documentation: Another strategy you can use in advance of a divorce is to keep clear documentation regarding your business operations and finances. Keep all of your business finances separate and well documented, as well as any involvement your spouse has in the business. Taking the steps can help you prove that your business qualifies as separate property if it was established before the marriage.
- Spouse negotiating: If you are in the middle of a divorce and your business is considered marital property, a strategy you can use to protect these assets is to negotiate with your spouse. Try to keep things amicable and provide them with options that benefit both of you, such as buying them out or trading their portion of your business for a different marital asset.
How Business Debt Is Handled in Divorce
Ohio law is very clear when it comes to how debt is divided in a divorce, labeling all debt as marital debt that will be divided fairly. However, there may be instances where certain types of debt are separate if it was acquired before the marriage or acquired under certain circumstances. One of these exceptions is if the debt was incurred solely by and for one spouse.
Because of this exception, business debt could very well be labeled as separate debt if it applies only to one spouse. This isn’t the case if your spouse is a co-owner of the business or is actively involved in the business.
It is strongly recommended that you hire an Ohio divorce attorney to represent you and help you document your business debt and assets to get the best possible outcome.
FAQ Section
Can my spouse claim part ownership of my business?
Yes, whether the business was founded before or after the marriage, your spouse may claim that they have part ownership and that the assets are marital property. This would apply if the business was founded during the marriage, if the business’s value increased after the marriage, or if your spouse contributed to the business.
How do courts handle family-run businesses in divorce?
When it comes to family run businesses during divorce proceedings, the business will be considered marital property. Because of this, the business will have to be divided fairly between both spouses.
What happens if my spouse worked in the business?
In this type of situation, the business would be considered marital property and would be divided fairly between both spouses.
Will I have to sell my business to divide assets?
Not necessarily, you have the option of trading a different asset for your spouse’s claim to your business, buying them out, or making them a co-owner.
Hire a Divorce Attorney in Ohio
Protecting your business in a divorce in the state of Ohio is essential for ensuring that you have a positive financial future. Richard P. Arthur, Attorney at Law, has extensive experience handling divorce cases for business owners in Ohio and can help you protect your business and personal assets. To proceed with your divorce case, contact us today at 937-254-3738 for a free consultation.