How to Protect a Business in the Event of Divorce

By: Amy R. Stern, Esq.

A business owner living in Pennsylvania, including Montgomery County or Bucks County, who is married or considering marriage, should know how his or her business may be affected in the event of divorce. The following legal issues may pertain to a business and a marriage:

The value of your business may be included in a divorce settlement. Under Pennsylvania law, marital property is defined as all property acquired from the date of the marriage until the date of separation, including property that is titled in only one person’s name and including any increase in value in property acquired before the marriage.

A business may be scrutinized during divorce proceedings to determine income for support and equitable distribution purposes. A prenuptial agreement may exclude a business from equitable distribution proceedings as long as full disclosure has been provided.

Some guidelines you can follow to generally protect a business are as follows:

  • Have a good business accountant. This person should be able to help explain your financial decisions if they are called into question by the other party.
  • Retain all records of the value of your business at the time of your marriage. With this information, you will be able to record the appreciation and depreciation of the business during the marriage.
  • Itemize all expenses; keep accurate tax returns, records, books, and receipts. These will all be scrutinized in a support context.

Creating a fair settlement requires good information from both parties. When you have good records, you can protect your business ‑ and yourself ‑ in the unfortunate event of divorce.