Divorce is rarely easy and can have a big impact on many aspects of life, including business.
Small business owners in Tennessee should understand how divorce may affect their operations. That way, they can safeguard their investments and keep things running smoothly.
The effect of divorce on small businesses
When a married couple divorces, they must navigate the complex process of asset division. Businesses often qualify as marital property, making it subject to division between spouses. This can lead to several potential outcomes:
- Valuing the business
- Dividing ownership
- Buyouts and sales
- Hindered business operations
So much depends on the specific business involved and what your existing prenup agreement outlines, if you have one.
Special considerations under Tennessee law
Tennessee follows the principle of equitable distribution. The goal is to divide marital property in a way that’s fair rather than equal. Small business owners should be aware of this concept’s implications.
First, property acquired during marriage counts as marital property and faces division. However, if the business started before the marriage, it may qualify as separate property.
Tennessee courts also take a detailed approach to valuing and dividing business interests. They consider factors such as the length of the marriage and each party’s financial circumstances.
While there’s no doubt divorce can pose several unique challenges for small business owners, understanding Tennessee law is key to protecting your business interests. Whether you seek legal agreements, professional valuations, or otherwise, proactive measures can go a long way in reducing divorce’s toll on a small business.
