Are you a sole proprietor? Or does your partner have a sole proprietorship? And are you getting divorced? Then one of you may have to pay a buyout sum to the other. Also, if there are children, you will have to determine the amount of child support. And you may also need to make arrangements for spousal support and pensions. Below you will find more information about the main points of interest.
Marriage or community of property?
If you were married on prenuptial agreements, those agreements may provide that the sole proprietorship remains outside the community. In that case, the divorce does not affect the business. But beware: has a so-called periodic settlement clause been included in the prenuptial agreement, but you did not settle each year? Then there may still be a community of property.
Were you married without a prenuptial agreement before Jan. 1, 2018? If so, you were married in full community of property. In that case, the sole proprietorship falls fully into the community and the assets and liabilities of the business will have to be divided. This is also the case if you married without a prenuptial agreement after January 1, 2018, and one of you started a sole proprietorship during the marriage. There is then a limited community of property.
Complicated? Please feel free to contact us. We are happy to answer your questions.
Valuation of sole proprietorship in divorce
If the sole proprietorship falls into the community of property, the assets and debts of the business must be divided or settled. The starting point is that the sole proprietorship can be continued after the divorce. In order to come to a proper division, you can consult with your partner. But it is better to first calculate what the sole proprietorship is worth. For this you can consult an accountant. If you do not have an accountant, we will gladly refer you to one from our network.
Now, even with a sole proprietorship, discussions sometimes arise about the value of the business, the division and how to divide it. Financing and tax issues can also arise. It is therefore a good idea to seek advice on these matters. Not only by an accountant, but also by a lawyer in family law and/or a tax expert. Of course you can contact us and our network for this. In recent years, our firm has assisted many self-employed persons and their ex-partners with their divorce and alimony calculations.
Sole proprietorship and alimony
The calculation of spousal and child support is partially based on the income of the person paying the support. For someone who is employed, that income is usually quite straightforward to determine. However, for a self-employed person, it’s different: their revenue can vary from year to year or even from month to month. This can affect the amount of support.
If you need advice or would like to have a (new) alimony calculation done, please feel free to contact us. Our lawyers specialize in alimony issues.
Pension
If you get divorced, by law you are mutually entitled to half of the pension accrued during the marriage, unless you agree otherwise in the prenuptial agreement or divorce covenant. Now, not many self-employed people build up pension, but if they do, the future ex-partner is entitled to half of the value. Fortunately, it is possible to make customized agreements about this. We would be happy to advise you on this.
