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When startup entrepreneurs get a divorce

On Behalf of | Jan 22, 2018 | Property Division |

When people in Missouri get a divorce, the process might become more complicated if one owns a startup company. According to some attorneys, the divorces of tech startup entrepreneurs have displaced those of doctors and lawyers in creating complex high-asset divorces.

Many of the entrepreneurs do not have prenuptial agreements. California, where many of them are based, is a community property state, and this means that most assets acquired after marriage are considered shared property. Therefore, a person may have a claim on half of the other person’s business. In one case, both spouses in a couple were entrepreneurs, but the woman’s startup failed. However, she was still able to keep half of the proceeds from the sale of her husband’s startup when they divorced.

The work culture of startups may lead to divorce since entrepreneurs may find themselves with little time to maintain a relationship. Some entrepreneurs might worry about divorce because of the financial losses. However, wealthy entrepreneurs will still have a considerable amount of money even if they have to pay some of it to a spouse, and it may be better than remaining in an unhappy relationship. The biggest challenge in dividing a startup in a divorce may occur if the company has not yet sold or gone public. It can be difficult to get an accurate valuation of the business.

Even though Missouri is not a community property state, dividing a business may be a complex aspect of property division for divorcing couples. An equitable division of marital property is still required although this does not mean all property will be divided 50/50. However, one person might still have a claim on the spouse’s business. The two might even run a business together. Other types of property that could lead to complications during property division are investments, art collections, retirement accounts and homes.

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