Most business owners take great pride in the work they put into their businesses, because for them, their business may be their biggest investment and largest source of income. It's understandable then that they would have questions and concerns about their business holdings, especially in the event of divorce.
Because of their very nature, business holdings create challenging property division situations for many business owners going through divorce proceedings. That's because determining whether it's considered separate property versus marital property can change depending on each business owner's situation.
To get a better understanding of what we mean, let's take a look at Georgia law and see how it can affect business holdings in divorce.
Georgia property division laws
As you may or may not know, Georgia is an equitable distribution state. The means of dividing property in equitable distribution states relies on how property is categorized: separate or marital property. Any property or assets acquired before the marriage are typically considered separate property while anything acquired after the start of marriage is typically considered marital property.
We say "typically" because in each case, labeling something as separate versus marital relies heavily on the couple's individual situation. Certain actions taken with separate property can turn it into marital property down the road. If the spouse who originally owned the property does not understand what has happened, disputes can arise when it comes time to divvy up property during divorce.
Are business holdings separate or marital?
This question does not have a universal answer because, as we said above, determining separate from marital property is based on a couple's situation at the time the property or assets were acquired as well as the actions they took to the property or assets while they were in their possession.
Consider for a moment a closely held business started before a couple's marriage. This would typically be considered separate property unless either spouse played a role in the business's success (Sullivan v. Sullivan, 295 Ga. 24, 757 S.E.2nd 129 (2014)) during the course of marriage. In this case, not only is the share of the business holding in question, so too is the revenue generated because of the business's success.
Getting legal help
As you can imagine, business holdings can create contentious legal situations that may or may not be resolvable outside of the courtroom. In many cases, it's best to seek the help of a family law attorney when dividing assets, especially business holdings, as these tend to complicate matters.