A divorce is especially complicated when there is a business involved. In order to effectively protect your financial and business interests, it is important to find a Topeka divorce attorney who understands complex and high-value asset division in a divorce.
Marital Property in Wichita
In Kansas, the law only distinguishes between a couple’s marital and separate property during their marriage. Once they file for divorce, all their property is considered marital property. This includes property obtained before they were married and property only titled under one spouse’s name. All property could be divided in divorce.
Although it is common for individuals to receive the property they owned prior to the marriage, this is not guaranteed. Courts have discretion and flexibility in deciding which spouse gets what based on equitable distribution laws.
Under these state laws, your business, regardless of when you founded it, is marital property. If your divorce is handled by the court, it will be subject to equitable distribution.
This is why many business owners prefer to handle their division of property through divorce mediation or collaborative divorce. This gives them more say over the outcome of the business division and enables them to negotiate creative solutions that support their spouse while keeping the company intact.
Options for Dividing Your Business or Protecting It During Property Division
Spouses may co-own a business, or only one may own the business. Each unique situation will require unique solutions, and so will the wishes of each spouse. In some cases, spouses want to maintain the business, while in others, they wish to sell it. Some options for dividing or maintaining your business include:
- Buy-Out: You or your spouse can buy out the other’s share in the business. This is useful if one spouse wishes to maintain the company and the other doesn’t. The buy-out may consist of liquid assets or providing the other spouse with more marital assets. This buy-out should be equal to the spouse’s share in the business. The company’s future growth and the effect on their share should also be considered.
- Sale: In situations where neither spouse has an interest in maintaining the business, you can sell it and equally or equitably split the profits.
- Paycheck: Another option if only one of you has an interest in maintaining the business is to provide the other spouse with a salary or paycheck. This allows a spouse to receive a portion of the business’s profits and accounts for future growth of their share in the company.
- Co-Ownership: You and your spouse can also continue to co-own a business that you co-owned while you were married. If you believe that you can work together in a business relationship, and both of you wish to maintain the business, this can be a great option.
Protect Your Business Early in Life
There are steps you can take earlier to protect a business before it comes to negotiations during divorce. This can be especially beneficial before you get married or immediately after starting or investing in a company.
Marital agreements, including postnuptial or prenuptial agreements, are agreements between spouses made before or during their marriage. When you create a marital agreement with your business in mind, you and your spouse can determine separate or marital property outside of the state laws. A marital agreement can also create other options for business protection or division.
Both parties should have an attorney when creating a marital agreement so that it is fair to both of them. The court will not enforce an agreement that is unfair or unconscionable to one spouse.
Shareholder or operating agreements can set terms for how to handle the divorce of a business owner. This can protect a business and provide proper compensation for the owner and their spouse.
FAQs
Q: How Is a Company Split in a Divorce?
A: A company can be split in many ways after a divorce, although the most common and simple way is to sell the business and split the profits. Other options include:
- One spouse buying out the other’s share with liquid assets or an equal portion of marital assets
- Co-owning the business after divorce
- One spouse pays the other a continual paycheck, which is a portion of the profits
A marital agreement or shareholder agreement may determine how the value is split in a divorce.
Q: What Is the Division of Assets in a Divorce in Kansas?
A: The division of assets in a divorce in Kansas allows spouses to split their marital assets when they separate. It is done based on equitable distribution laws, which means that the court attempts to split assets equitably between spouses, but not always equally. The court will look at factors like how long the couple was married, the income and economic circumstances of each party, and whether alimony will be awarded, among other factors. Based on this information, the court will determine a fair split.
Q: Is Kansas a Common Property State?
A: Kansas is not a common property state. During a marriage, each spouse has separate property from prior to their marriage and marital property that was obtained during their marriage. However, when spouses file for divorce, the entirety of each spouse’s assets are considered marital property, regardless of when each asset was obtained. This means that any property could be split based on the court’s equitable distribution laws, and no property is considered off-limits.
Q: Does Infidelity Affect Divorce in Kansas?
A: No, infidelity does not affect divorce in Kansas. The only fault-based grounds for divorce in the state are failure to perform a marital obligation or duty or incompatibility based on mental illness or incapacity.
Infidelity is not a basis for filing for divorce, nor is it a stated factor when the court decides the equitable distribution of property or whether to award spousal support. The dissipation of assets is one consideration for equitable distribution, which may be relevant if a spouse wasted assets on an affair.
Protecting Your Current and Future Financial Interests
The division of marital assets can have a significant effect on your financial stability after a divorce and into your future. Contact Stange Law Firm to advocate for your interests and protect your rights.
