Can My Spouse Claim Profits From My Business In Our Divorce?



Divorce is a life-altering event that brings with it a host of legal, financial and emotional considerations. Divorce rates in 2021 were 9.3 for men and 9.4 for women per 1,000 of the married population in the UK, a noticeable increase from the year before.

If you are a business owner facing divorce, one of your primary concerns may be whether your spouse can claim a share of the profits from your business. The answer to this question can vary depending on several factors, including the jurisdiction in which you reside and the specific circumstances of your business and marriage. 

In this article, we will explore the potential scenarios in which a spouse may be entitled to claim profits from a business during a divorce, shedding light on the considerations involved.

Is My Business A Marital Asset?

In many jurisdictions, businesses acquired or established during the course of a marriage are considered marital assets and subject to division during a divorce. This means that if you started or acquired your business while married, the profits generated during the marriage may be considered marital property and, consequently, eligible for distribution between you and your spouse.

What Is The Difference Between Marital and Non-Marital Assets?

To determine whether your spouse can claim profits from your business, it’s essential to differentiate between marital and non-marital assets. Non-marital assets typically include properties or businesses acquired before the marriage or through inheritance or gift. 

If you can demonstrate that your business falls under the category of non-marital assets, its profits may be considered separate property and not subject to division during the divorce.

What Happens If My Spouse Contributed to the Business?

The degree to which your spouse contributed to the growth and success of your business during the marriage can influence the court’s decision on profit division. If your spouse actively participated in the business, made financial investments or played a crucial role in its development, they may have a stronger claim to a portion of the profits.

What Is A Business Valuation?

In divorce cases where a business is considered a marital asset, the court may conduct a valuation of the business to determine its worth. 

This valuation process considers various factors, including the business’s financial performance, assets, debts and market conditions. The profits generated by the business play a significant role in determining its overall value, which can affect the division of assets during the divorce.

Can I Negotiate a Settlement Without Going To Court?

During a divorce, couples may have the option to negotiate a settlement that addresses the division of assets, including business profits, without going to court. 

Through mediation or collaborative divorce, spouses can work together to reach an agreement that is fair and equitable for both parties. In such cases, the couple has more control over the outcome, and the division of business profits can be tailored to their specific circumstances and priorities.

The question of whether your spouse can claim profits from your business in a divorce is a complex matter that requires a thorough examination of various legal and financial factors. In many jurisdictions, businesses acquired during the marriage are considered marital assets subject to division. 

However, there are instances where a business may be classified as separate property if it was acquired before the marriage or through inheritance or gift. The level of contribution from the spouse to the business and the valuation of the business also play significant roles in determining whether profits are eligible for distribution. 

As every divorce case is unique, seeking professional legal advice and guidance is crucial to understanding your rights and obligations concerning your business profits during the divorce process.