If you are a business owner, understanding (and protecting) your rights with respect to the business could be one of the most important aspects of your divorce. Indiana’s unique equitable distribution law raises some potentially-challenging issues for business owners, and any spouse preparing for a divorce in which a privately-held business could be subject to division must take appropriate steps to plan ahead.
In most cases, the answer to this question will be, “Yes.” In Indiana, the general rule is that all assets owned by either spouse are subject to division in their divorce. This includes not only assets acquired during the marriage, but (unlike other states) assets acquired before the marriage as well. There are only very limited exceptions to this rule, one of which is that spouses can exclude certain assets from division under the terms of a prenuptial agreement.
If you and your spouse entered into a prenuptial agreement, what does it say about the business (if anything)? In an ideal scenario, the business owner and his or her fiancé will have thoroughly addressed the issues of ownership and control prior to their marriage so that there is no room for dispute in the event of a divorce.
Of course, not all scenarios are ideal. Maybe you did not enter into a prenuptial agreement. Or, maybe you did but you did not anticipate certain issues that you are now anticipating in your divorce. Perhaps your spouse even has grounds to argue that your agreement is unenforceable. Whatever the situation may be, understanding the impact of your prenuptial agreement (if any) should be one of your first steps in preparing for your divorce.
Assuming your business will be subject to equitable distribution, does your spouse have any interest in maintaining an ownership interest or an active role in the company? Do you have evidence – such as emails or text messages – in which he or she professes a lack of interest? Or, has he or she played an integral role and become personally invested in the business’s success or failure? The answers to these and other similar questions should all help guide your strategy for approaching the division of your marital assets.
Once again assuming that your business is on the table, what assets are you willing to give up in order to secure sole ownership and control after your divorce? The presumption under Indiana law is that the spouses’ “marital pot” should be split 50/50; and, even an alternate split is warranted, you will likely need to forego your rights in certain other assets in order to negotiate for outright ownership of your company.
If you would like to speak with an attorney about developing a strategy to protect your business in your divorce, contact Hains Law, LLC for a free and confidential consultation. Call our Carmel, IN law offices at (317) 688-1305, or submit a consultation request online and we will be in touch as soon as possible.