Divorce can be a complicated and emotional process, but for business owners, it often comes with unique challenges, especially when your business is structured as a Limited Liability Company (LLC). If you own an LLC, understanding how it may be treated during divorce proceedings is crucial for protecting your financial interests and securing a fair outcome. In this article, we break down how LLCs are handled during divorce proceedings in Raleigh, NC and surrounding areas, what to expect, and how our complex divorce attorneys at New Direction Family Law can help.
What is an LLC and How Does It Affect Divorce?
A Limited Liability Company (LLC) is a business structure that combines the flexibility of a partnership with the limited liability protection of a corporation. LLC owners, better known as members, generally aren’t personally liable for the company’s debts or legal issues. However, this protection doesn’t automatically shield your business from division during a divorce.
Whether your LLC is considered marital property or separate property can significantly impact how it is treated in court.
Determining Marital vs. Separate Property in NC
During a divorce, the division of assets is a central issue. In North Carolina, the property acquired during marriage is typically divided equally between both parties, regardless of whose name the asset is in. But when it comes to businesses and other significant assets, the process is not always straightforward. Here is a general guide for how an LLC is treated during a divorce to establish whether it is considered marital or separate property.
- Marital Property: If your LLC was created during your marriage, or if marital funds were used to establish or grow the business, it is generally considered marital property. In these cases, both spouses may have a claim to the business’s value.
- Separate Property: If the LLC existed before your marriage and marital funds were not invested in it, it may be considered separate property. However, any increase in the business’s value during the marriage can still be subject to division.
Working with an experienced business divorce lawyer in Raleigh is essential to determine whether your LLC is marital or separate property and to safeguard your interests.
Entrust your case to our seasoned divorce attorneys at New Direction Family Law, currently serving Wake, Durham, Johnston, and surrounding counties with nearly 100 years of experience. Contact us today at (919)719-3470 or fill out our online form here.
Valuing the LLC
Once it is established that the LLC is marital property, the next step is valuation. Business valuations can be complex, involving an assessment of assets, liabilities, revenue, and future earning potential. Forensic accountants or business valuation experts are often engaged to provide an accurate estimate.
One common method used for valuing businesses in Raleigh divorce cases is the income approach, when the financial expert calculates the present value of the income it is expected to generate in the future. A skilled divorce attorney in Raleigh can coordinate with financial experts to ensure the valuation of the LLC is fair and thorough.
Navigating the division process requires a nuanced understanding, and with our experienced legal team by your side, you will gain clarity on asset valuation and receive the advocacy you deserve to secure your rightful share of marital assets. Plus, our extensive network of financial professionals ensures support for your long-term financial well-being.
Serving Wake, Durham, Johnston, and surrounding counties, we adeptly handle property identification, valuation, and protection including, but not limited to:
- Business ownership
- Stocks and stock options
- Retirement accounts (pensions, 401(k)s, IRAs, etc.)
- Medicare benefits
- Cryptocurrency
- Real estate and investment properties
- Vacation properties
- Vehicles and other personal property
Contact our team at New Direction Family Law today!
How an LLC Can Be Divided During Divorce
After the business valuation, the process of dividing the company between both spouses can begin. Dividing a business can be sensitive, and there are several ways courts and couples handle this:
- Buyout: One spouse buys out the other’s interest in the LLC. This option allows the business to continue operating without disruption.
- Joint Ownership: Ex-spouses may choose to co-own the business post-divorce, but this requires strong cooperation and trust, which is not an option for all couples.
- Sell the Business: If neither spouse wants to continue the LLC, selling it and dividing the proceeds is another option.
Our team at New Direction Family Law recommends contacting a skilled divorce attorney in Raleigh to guide you through these options and determine which approach best protects your financial future. Give us a call at (919)719-3470 or fill out our contact form to speak with an attorney today.
Protecting Your Business During Divorce
There are proactive steps that LLC owners can take to protect their business and minimize conflict:
- Operating Agreement: A comprehensive, well-drafted operating agreement can specify how ownership changes in the event of divorce, reducing conflict in the event of a divorce.
- Prenuptial or Postnuptial Agreements: Prenups and postnups can outline the division of business assets, providing clarity and security in case of divorce. Prenuptial agreements are signed before marriage, while postnuptial agreements provide a sense of security after a couple has said their vows.
- Legal and Financial Guidance: Consulting with a divorce attorney in Raleigh, NC who specializes in business asset divisions can help you navigate complexities and achieve a fair resolution.
Contact Our Divorce Attorneys Today
If you own an LLC and are facing divorce, securing the right legal support is critical. New Direction Family Law is located in Raleigh, NC, providing trusted guidance for clients navigating complex divorces and business asset divisions. Contact us today at (919)719-3470 or fill out our contact form to schedule a consultation with one of our knowledgeable divorce attorneys.
