Sometimes Baton Rouge couples decide if they can enjoy a personal relationship with each other, sharing a business together might work out just as well. However, if the marriage hits the rocks and the couple decides to call it quits, the divorce process is also going to directly impact their business. Since both spouses own a part of the business, the company falls under Louisiana's community property laws and may be split up as well.
As Entrepreneur.com points out, a Louisiana business owned by two spouses is considered jointly owned as a marital asset. Also, a spouse that is not a direct owner of the business could lay claim to some of the company's value if he or she has invested some money in the enterprise. Since a Louisiana business is subject to the state's community property law, there are several outcomes that, depending on how the divorce proceedings progress, could result.
First, the business could be sold to produce a cash payment to one of the spouses. However, the Entrepreneur.com article points out that such an outcome is unlikely, since the loss of a business would also deprive the spouse who still owns the company of an income source that could be used to pay support to the ex-spouse. Still, selling off a company remains a possibility that divorcing couples should take note of.
Secondly, a court may decide to award sole business ownership to one of the spouses. A judge may decide that a particular spouse is better equipped to run the business over the other. A court might also provide a way for a spouse to cash out his or her ownership interest without selling off the business. Couples may also work out a gradual buyout plan for one spouse to pay the other for the spouse's share of ownership over a period of time.
If you think a divorce might be just over the horizon, consider protecting your business ahead of time. You can work out a buyout plan for the other spouse or try to ease your spouse out of the company, though you should be as graceful about it as possible. You can also bring in other investors so that the ownership of the business is distributed among more people than just you and your spouse.
Keep in mind that this article is not written to provide any legal advice. It is written to educate Louisiana residents on community property law and the impact it has on businesses owned by divorcing spouses.