When you and your spouse got married when you had a small, start-up business. You didn’t get a valuation done at the time, but you were making about $100,000 per year.
Things changed over the ensuing years. Your business grew to the point where you now bring in millions every year. The value of the company has increased massively. Now your spouse has asked for a divorce. Do they have a right to your company or at least a portion of it?
The increase in value is likely to be considered marital property
Even if your spouse wasn’t involved in the business, the growth in value while you were married is likely marital property that needs to be split. This is especially true if your spouse took care of the home and the children while you worked. The court may see this as their contribution to allowing you to be successful.
People often protect their business by drawing up a prenuptial agreement. The prenup can simply state that the company is yours alone and all value changes belong to you. Your spouse still has a right to some of the money you brought home in salary, as it’s joint property in a shared bank account, but not to any portion of your business. You can also do this with a postnuptial agreement, which many people draft when they see large increases in business value after marriage.
If you don’t have a prenup or postnup and want to protect your company you need to know what options you have. An experienced family law attorney can help you.