How Will a North Carolina Divorce Affect My Small Business?

Posted by Jonathan Jerkins | Nov 20, 2018 | 0 Comments

For many small business owners, their business is their main source of income and their most valuable asset. When North Carolina small business owners find themselves in the midst of the divorce process, they may worry about what will happen to their business -- or if it will even be part of the proceedings. Divorce can be complicated and tumultuous, and this increases exponentially when one or both of the parties owns a small business.

In an equitable distribution state like North Carolina, any marital property, including a small business, is up for division. A knowledgeable North Carolina divorce attorney can guide you through the divorce process while finding all options for protecting your business and your income.

Equitable Distribution

North Carolina is an "equitable distribution" state, which means that all property obtained during the marriage is subject to an equitable split. This does not mean it is necessarily an equal split. Assets obtained before your marriage are considered your separate property and not subject to equitable distribution.

If you owned your business before your marriage, your business is considered your separate property. Also, if you have a prenuptial or postnuptial agreement, your business may not be part of your divorce proceedings if the agreement lists the business as your asset. Your attorney will review any prenuptial or postnuptial agreements with you so that you understand what is protected and what is subject to equitable distribution.

If you started your business after your marriage, it is subject to equitable distribution. Determining what is equitable is a four-part process.

  1. The court identifies assets and debts held by each spouse.
  2. Assets and debts are classified as separate, marital, or divisible.
  3. Each asset and debt is valued.
  4. Assets and debts are distributed equitably. Although sometimes "equitable" means "equal," the court may consider the age, health, and income of each spouse to determine what is equitable, especially when one or both owns a small business.

When the court considers an equitable distribution of your small business, it includes the legal structure of the business, business assets acquired during your marriage, and each spouse's role in the business. This helps the court determine an equitable outcome.


If both spouses agree, the business can be split however they wish. If they do not agree, the court usually divides the business one of these three ways:

  1. One spouse keeps ownership of the business and buys out the other spouse. This may be a one-time lump sum or through payments over time to reduce the financial burden.
  2. Sell the business and split the proceeds between the spouses.
  3. Continue operating the business together after the divorce.

Hire an Experienced North Carolina Divorce Attorney

The best way to protect your small business through your divorce is to hire an experienced family law attorney. Jerkins Family Law understands equitable distribution in North Carolina and will fight to protect your business and your future. You can focus on running your business while our attorneys handle your divorce negotiations. If you are a small business owner and facing a divorce, visit our dedicated Divorce page and contact our office today.

About the Author

Jonathan Jerkins

Jonathan "Jay" Jerkins, a native of Raleigh, North Carolina, intentionally focuses his practice on all aspects of North Carolina family law litigation and negotiations. Jay was admitted to the practice of law in North Carolina in 2014.


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