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Asked 4 months ago - Saint Paul, MN
FlagI am in the process of forming a business partnership and creating an LLC. The business is not yet making any money. If I get divorced after forming the company when it is still not making money, will my spouse be entitled to any future earnings?
Generally, as part of a property settlement, she would be entitled to one half of the value of your interest in the business. If that interest is zero, her interest is zero. A company that is not making money has limited value which could be limited to the calculation of its assets less its liabilities.
Obviously, the type of business plays a role in valuation. As a result, uyou must consult with an experienced family law attorney.
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I agree with counsel. Regardless, you will want to make sure this issue is clearly and completely addressed in the divorce decree, whether you stipulate to an agreement with your spouse or whether in a contested situation. The language of the decree will be critical. I suggest getting an attorney to represent you or the very least review a decree before signing it.
If you form the business during the course of your marriage, your spouse is entitled to half of the value of the business. As it does not sound like the business is not currently worth anything, this is less of an issue. However, who owns/keeps the business must be addressed in your divorce. Your spouse could certainly ask the court to award half of all future profits. If you wish to own 100% of the business after your divorce, make sure that's what it says in any stipulation settling your divorce. I would recommend hiring a lawyer to address this issue if you haven't already.
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