Divorces can be incredibly complex, particularly when it involves the division of assets and debts, and it becomes even more intricate when a couple owns a business. In the state of New Mexico, specific steps and strategies must be followed when dealing with business debts during a divorce. This article will provide you with the necessary information to navigate this challenging process.
Divorce and Property Division in New Mexico
When it comes to divorce in New Mexico, the principle of equal division applies to both marital property and debt. Marital property refers to any asset or debt acquired during the marriage, regardless of who made the purchase or earned it. It’s important to note that property owned by one spouse before the marriage, or acquired by gift or inheritance, is considered separate property and is not subject to division.
What Happens to Business Debts?
Business debts are treated in a manner similar to any other debts obtained throughout the course of the marriage. Both spouses share the responsibility of repaying any business debts accumulated during the marriage, regardless of whose name the debts are in. When one spouse is awarded the business during the property division process, they also become responsible for the associated business debts.
When dividing business debts, it becomes crucial to determine the portion of the debt incurred for business purposes rather than personal reasons. Depending on the circumstances, debts acquired for personal reasons might not be subject to equal division.
Consider a Prenuptial Agreement
Business owners who plan to enter into marriage should strongly consider the implementation of a prenuptial agreement. This legal document serves to safeguard business assets and debts in the unfortunate event of a divorce. A prenuptial agreement outlines how business assets and debts should be divided and can also establish the terms of spousal support, or even exclude it entirely.
By having a prenuptial agreement in place, business owners can effectively minimize the risk of disputes and protracted legal battles during the divorce process.
Get Professional Legal Assistance
When grappling with business debts during a divorce, it is vital to seek the guidance of a qualified attorney. An experienced divorce lawyer will provide valuable insights into your rights and obligations concerning business debts in your specific circumstances. They will also assist in negotiating a resolution that ensures the best possible outcome for your case.
Summary
Divorces involving business owners can quickly become convoluted, especially when it involves the division of business debts. In New Mexico, the principle of equal division extends to business debts, alongside marital property and other debts. Business owners can protect their assets and debts by proactively entering into a prenuptial agreement before getting married. However, it is crucial for all business owners to seek the assistance of a legal professional to secure the most favorable outcome during the divorce process.