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Divorce for the self-employed can be more challenging

On Behalf of | Dec 11, 2018 | Uncategorized |

If you are self-employed or are married to a self-employed spouse, if you get divorced, you could face a few different hurdles than divorcing couples who work for corporate bosses.

Unless your start-up is now a Fortune 500 company, chances are good that you have seen lean years. You may even still be at the helm of a fledgling business or struggling to keep your one-man boat afloat in an uncertain gig economy. Self-employment is often cyclical in nature. Especially if you are in retail, your business might be in the red for three quarters of the year, with Black Friday sales pushing it into the black only in the year’s final quarter.

Spousal support harder to project

As a self-employed spouse in a community property state, depending on your partner’s income status, you could potentially be ordered to pay or be able to seek spousal support. However, the nature of your business may make it difficult to establish a bottom line for your finances.

Maybe you have a bicycle and canoe rental shop that does a booming business all summer long. But when fall and winter roll around, you may hunker down in survival mood and drive for Uber to make ends meet. You can see how self-employment could play havoc with the support obligations of either ex-spouse.

Work property is also a factor

To use the above example, your business property could become commingled with the community property of your marriage. If you and your spouse bought the 2016 Saturn that you now also use to make those Uber runs, it could potentially become a sticking point in the property settlement phase of your divorce.

So, too, could the laptop you use to schedule bike and canoe rentals if your soon-to-be ex-spouse alleges that it’s part of the community and not separately owned business property. This is a good example of why it is always best to clearly delineate which are separate, community and business assets when making a purchase — and afterwards.

Self-employed individuals seeking a divorce should learn all that they can about the laws that affect them before taking any action.


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John T. Chamberlin, Attorney at Law
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