Can my ex-wife still be awarded a portion of the business? Do state divorce laws overrule the company bylaws?
Since I am only licensed to practice law in Wisconsin, I can only provide you with general divorce help for men to your question about business and divorce.
Your wife is probably entitled to the value of one-half of your interest in the business if you did not acquire the interest through inheritance or gift.
I practice in a marital or community property state. After a couple gets married, all their income and assets become merged into one marital pot. You are entitled to 50% of your wife’s income and she is entitled to 50% of your income.
Likewise, you each own equal shares in each other’s assets. An exception exists for any property a spouse received by a gift or inheritance either before or during the marriage.
A business interest is considered a marital asset just like any tangible property, and your wife is presumptively entitled to 50% of the interest’s value. If you received your 25% business interest as a gift, the full value belongs to you as individual property. If you acquired the interest through marital funds or for service rendered, the 50% interest presumption applies.
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However, your wife’s interest in your business interest does not translate into ownership or equity. A family court does not exercise jurisdiction over the company’s management or inner workings.
Your wife will not receive half of your ownership in the company but is entitled to half of your interest’s value.
Therefore, it would not be unreasonable for the court to award you your 25% business interest and order you to compensate your wife for her part of the interest through other resources. A valuation of the business may be necessary to complete this division.
I recommend consulting with a mens divorce attorney before you take any action to better protect your business interests.