Your business is probably a big part of your life. As someone who owns the company, you probably put in far more than 40 hours a week to run your business. You likely feel a sense of pride about your company’s growth and successes and have plans for the company’s future.
Whether you hope to sell the business when you want to retire or pass it down to your children, a divorce could prevent you from achieving those goals. Some business owners in Colorado will realize when they think about divorce that the company they own is at risk.
What might happen to your company during a divorce in Colorado?
Your spouse may have a claim to the business
Simply having the company in your name does not make it your separate property in the eyes of the Colorado family courts. They will want to see when you started the company and what resources you have invested in the business.
If you used marital income to start or maintain the company, your spouse could potentially claim a share of its financial value in your divorce. If they contributed to the business directly by investing money or performing uncompensated labor, that could also give them a claim.
Thankfully, even if your spouse may have a right to ask for some of your business’s value in the divorce, that doesn’t mean you have to share ownership of the company with them.
What is your business worth?
One of the biggest and most important questions when addressing a business in a divorce is how much the company is worth and how much of that value is marital property. A careful review of your financial records for the business and your household will help you estimate the value of the company and how much of that value might be marital property.
If you litigate the asset division process, then a judge will ultimately decide what happens to the company. However, you can protect your interest in the business by taking a less acrimonious approach to divorce.
If there are other assets that your spouse has an interest in retaining, like a retirement account or your marital home, you may be able to negotiate a settlement where they keep the assets that matter most to them and you keep the business. If neither of you is fully committed to the idea of divorce but you think that one might occur, the two of you could negotiate a postnuptial agreement that discusses what will happen to the business if you do divorce in the future.
Understanding how Colorado handles property division can help you plan to protect your business during the dissolution of your marriage.