5 Things Every Entrepreneur Needs to Know About Divorce in Nevada
Most entrepreneurs choose to start their own companies because they want to launch an exciting business or product, or have greater control over their work schedule. Perhaps they want to shape their own careers and reap more of the financial benefits of their hard work. But launching a business often requires investing everything you have – and this can cause a great deal of strain on a marriage.
If you are an entrepreneur in Nevada, you should know that divorce can be much more complicated for entrepreneurs and business owners than for people with traditional, salaried jobs. Your exact income may be difficult to determine. As a result, reaching a fair resolution with respect to financial matters upon divorce may be challenging. Moreover, Nevada is a community property state. This means that your business, or certain aspects of it, may be the joint property of you and your spouse and it will be divided equally upon divorce.
This post discusses some of the key things that Nevada entrepreneurs must keep in mind when considering a divorce. It is not a substitute for consulting with a family law attorney. Only an aggressive Las Vegas divorce lawyer can give you legal advice about your rights with respect to your business, assets, and rights.
1. Nevada is a community property state.
In community property states, almost all income and property acquired during a marriage is owned equally by both spouses. Upon divorce, Nevada courts generally divide all community property equally between each spouse. The law does not require an “in kind” division of community property, which would mean that you would have to divide each asset. Instead, the law requires that each spouse must receive an equal division of the net value of the community property assets.
What does this mean for your business? If you started a business during your marriage, it is generally considered to be the community property of you and your spouse unless you signed a valid agreement to the contrary. When a business is operated by one spouse and that spouse has invested skill, labor, and expertise into developing the business, Nevada courts will typically award the business to that spouse and order him or her to “buy out” the other spouse. This means that you may have to give your spouse other assets or cash that is equivalent to half of the value of your business.
Even if you started a business prior to your marriage, your spouse may be entitled to half of the overall increase in the company’s value during the period you were married. This is one of the many reasons why hiring a Las Vegas divorce lawyer with experience representing business owners and entrepreneurs is crucial.
2. You may have to open up your company’s books.
In order to divide community property equally upon divorce, Nevada courts must assess the actual value of any community property assets, which may include your business. This typically requires the services of a forensic accountant, who will ask you to open up your company’s books and provide truthful information about its revenue and debts. Business owners who try to keep information from the court may be held in civil contempt. If you are an entrepreneur who is facing a divorce, now is a good time to organize your company’s financial statements.
3. You may be ordered to pay alimony.
Many people mistakenly believe that alimony (or “spousal support”) is an antiquated legal notion. The fact is that alimony is alive and well in Nevada. If there is a disparity between your income and that of your spouse, you may be ordered to make a lump-sum alimony payment or monthly alimony payments to your spouse. If your income increases by more than 20 percent after the divorce, your spouse can request that the court increase his or her alimony award accordingly.
As most entrepreneurs know, income for business owners is not always steady. Because your income as a business owner may fluctuate (or you may not be taking a salary from your business), it may be very challenging to negotiate an equitable alimony award. This is another reason why working with an aggressive divorce lawyer who has experience representing business owners is so important.
4. Alimony and child support payments may be difficult to calculate.
Both alimony and child support payments may be difficult to calculate. For entrepreneurs and business owners, income can fluctuate greatly from month to month (or worse, hover around zero). If your child support payments are set too high, you may fall behind – and this can result in serious legal consequences. You should be totally honest about your current and projected income with your divorce lawyer. That way, your attorney can fight for your best interests throughout the divorce process.
5. Hiring an aggressive divorce lawyer is critical.
Entrepreneurs have a unique set of needs and concerns when it comes to divorce in Nevada. If you are a business owner, do not leave your future to chance. Hire an aggressive divorce lawyer who can protect your legal rights and negotiate the most favorable divorce settlement possible.
Karen A. Connolly is an experienced Las Vegas divorce lawyer who represents entrepreneurs and business owners in family law matters. To schedule a confidential consultation, call (702) 678-6700.
Educate Yourself with Our Guide to Nevada Divorce
Divorce is a serious decision, and we understand how stressful and uncertain the time leading up to your divorce can be. That’s why we’ve provided free answers to your most pressing Nevada divorce questions in “A Guide to Nevada Divorce”.