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Can you lose your business in a divorce?

A business is probably one of the most valuable assets you'll ever have. Business owners spend endless hours making companies successful from the first day they open for business. 

If you are one of those business owner, what will happen to all your hard work if you get divorced? Will your spouse take half of your company? Will you be able to afford to keep the business running when you lose a significant portion of your other assets?

These kinds of questions are perfectly normal for a married business owner to ask themselves. 

As with many legal aspects of divorce, the answer to these questions is generally the same: it depends. Two aspects of your business could affect whether or not it is divided during a Georgia divorce:

What kind of business do you have?

  • If you have a sole proprietorship, the chances are high that the company will be fair game in the divorce settlement. 
  • If your business is a partnership, limited liability or corporation, there could be more protections available - as long as your spouse is not a partner. 
  • With some entity types, you can include a "lock-out clause" in the ownership agreement. With such a clause, the business can require that unmarried owners obtain a prenuptial agreement prior to marriage that prohibits ownership rights to be part of a divorce settlement. Or, the clause could insure that shares cannot transfer to another individual without the approval of the other owners. 

Who is on your payroll?

  • If you are paying yourself a minimal salary, your spouse could argue that you were using joint marital funds to prop up your company and keep it profitable. This means that the company's assets could be subject to divorce proceedings. 
  • If you are paying your spouse, they could claim that they have dedicated time and energy to helping the business become profitable and are entitled to their share of the company. 
  • If your spouse spends time helping you with the company but is not on the payroll, they could still make the argument that they have helped the business profit. It is best to keep your business separate from your marriage, if possible. 

If you are still forming your business, you may be able to take the necessary steps to protect your company. But if you have already created your business and you are considering divorce, you could be in for some difficult negotiations. If it looks like things aren't going your way, you may be able to give up more marital assets in exchange for keeping your company intact. 

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Hecht Family Law
12600 Deerfield Pkwy
Suite 125
Alpharetta, GA 30004

Phone: 678-926-9234
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