Sole Proprietorships and Division of Property
A sole proprietorship is the smallest possible kind of business. It has only one owner and, in many cases, it has no employees other than the owner. Therefore, sole proprietorship is the business entity designation for the professional activities of self-employed people. In divorce cases, courts take business ownership, including ownership of a share of a business, into account when determining the value of marital assets. For this reason, people who are partial owners of a business sometimes sign prenuptial agreements designating their interest in the business as separate property; therefore, the partners do not risk having to give part of their company to one partner’s ex-spouse. Sole proprietorships present an even more complex problem. All income earned by either spouse during the marriage is marital property, so what about the income earned by a sole proprietorship belonging to one spouse? If you have questions about how division of property will affect your business interests, contact a Tennessee divorce lawyer.
The Fuller Case: A Dispute Over Income from a Sole Proprietorship
Roger and Erin Fuller married in 1988 and filed for divorce in 2014. Early in the marriage, Erin became certified as an X-ray technician and worked in that field for several years. She then studied to be a registered nurse, because, while the starting pay was lower, the opportunities for advancement were greater; she was still working as a nurse at the time of the divorce. Roger worked as a financial planner; he owned a financial planning business of which he was the only employee. The business owned the building where Roger had an office, and it derived income from commissions on new sales of financial products and “trail income” from products he had previously sold.
When they divorced, Erin kept the marital home, and Roger kept the office building. After a dispute over how to determine the value of Roger’s trail income, the court decided to award Erin $1500 per month in permanent alimony. This was because her income as a nurse would always be much lower than Roger’s income as a financial planner.
Another Issue in the Fuller Case
When Roger and Erin divorced, their younger child was 17 years old. The parenting plan gave Roger 80 days per year with his son. In fact, the teen had his own car and drove himself to and from his father’s house, spending one or two nights per week there. In effect, he spent about 80 nights per year with his father. In general, when a couple’s children are old enough to drive, it is difficult to enforce the provisions of the parenting plan regarding parenting time strictly.
Contact an Attorney Today for Help
As much as you may try to keep your professional career separate from your personal life, your business interests almost always matter in a divorce. A family law attorney can help prevent your divorce from interfering with your hard-earned prosperity. Contact Knoxville divorce attorney Patrick L. Looper for a consultation.