Is divorce a bad idea for business owners?

On Behalf of | Jun 2, 2020 | Family Law |

Running a business and being married can both be complicated, and combining the two certainly does not make either any easier. When a marriage ends in divorce, it can complicate things even more. Certain processes that might seem relatively straightforward for most North Carolina couples — like support payments and debt — can be much more difficult for business owners.

The court orders child and spousal support payments based on parents’ income. But the court might have a different interpretation of a business owner’s income than he or she does. For example, that owner might choose to use only 70% of the business’ income as his or her take home pay, redirecting the other 30% to paying off business debt. The court could decide that 100% of the business’ income is also the owner’s income, and order him or her to pay child or spousal support based on this amount.

Income is not the only place where business owners have a bit of flexibility. An owner who needs a bit of help to cover marital expenses could choose to do so by borrowing money against property owned by his or her business. But if the owner does not tell his or her spouse where those funds came from, or the spouse wrongly insists that the loan was never used for joint expenses, then the loan could be considered separate property. This leaves the owner responsible for paying back something that was used for marital purposes.

It is true that there are certain financial implications of filing for divorce, but this should not prevent anyone — even a business owner — from ending an unhappy marriage. Men and women can take precautions to protect their financial situation, including making sure that marital assets and debts are correctly labeled as marital property. Unfortunately, North Carolina family law can be complicated. Seeking guidance from an attorney who is experienced with such matters could be helpful for business owners who are not sure how to proceed.