If you or your ex-partner own interests in a business, it is important to seek legal counsel during the divorce process. Marriage dissolution may affect your ownership in the company, whether it is a sole proprietorship, business partnership, LLC, or corporation.
Work with a lawyer who could explain the types of businesses in Chattanooga property division. At Yates & Wheland, we are here to advise you through this difficult time and help protect your financial interests.
A sole proprietorship is generally a company that is owned and operated by one person. Typically, this entity does not have any formal structure that protects the sole proprietor from lawsuits. Depending on what the sole proprietorship did during the owner’s marriage, the divorcing spouse may be entitled to part of the value of the company.
This depends on various factors, such as if the company was the sole source of income and whether it was formed before or after the marriage. A knowledgeable Chattanooga attorney could advise on how a sole proprietorship might be treated during the property division process.
Business partnerships can be formal or informal, but formal arrangements are easier to deal with during the property division process of a divorce. Formal documents can tell the court who owns what and what will happen in certain events, such as a marriage dissolution.
One potential problem with partnerships is that both partners are equally liable for lawsuits, like in a sole proprietorship. This means that people can attack their personal investment in the partnership, and there is no protection from creditors. As such, a divorcing spouse could pursue a business partner’s personal assets during divorce.
Controlling documents could define terms for what will happen in the event of a divorce. For instance, if a partner’s ex-spouse is awarded part of the company, an agreement might state that one of the other partners has the right to buy them out of their interest in the partnership. A local property division lawyer experienced in handling these types of businesses could further advise on creating beneficial agreements.
A formal corporation must follow the statutory rules for formation, so it will have certain documents that control how the company is owned and operated. This functions as a layer of protection in the event of a divorce.
Essentially, corporations are considered separate legal people. If one spouse is trying to get the ownership interest of the other spouse, there are more avenues for the corporations to prevent this from happening.
Limited liability companies have a more fluid structure than corporations. Their primary purpose is to limit the liability of the members of the company. However, this may make it easier for a person to pursue their ex-spouse’s business interests during the divorce process. The Chattanooga court may occasionally assign ownership of a member’s interest to their spouse during property division, as an experienced attorney could further explain.
If you are a business owner going through a divorce, it is critical to work with a skilled attorney who could represent your best interests and protect your company. At Yates & Wheland, our legal team is skilled at handling various types of businesses in Chattanooga property division. Give us a call today to discuss your situation and get the legal guidance you need.