Complications of Commingling Business and Personal Assets

In Pennsylvania, the equitable distribution of marital assets requires careful consideration of all property, including business interests. Yet when business and personal assets are commingled, it can be difficult to distinguish what belongs to the marriage and what is separate property. Share your concerns about melded assets with a Bucks County family attorney, a professional who can approach the situation with diligence and legal expertise.

Valuing Business Assets in Divorce

Commingling occurs when business assets and personal assets are mixed together in such a way that it becomes difficult to distinguish between them. For example, if a business owner uses personal funds to invest in their business or uses business profits to pay for personal expenses, the line between business and personal assets blurs. This can create significant challenges in a divorce, as both types of assets must be accurately identified, valued, and divided.

When a business is involved in a divorce, one of the first steps is to determine its value. This isn’t always easy as businesses are often valued based on factors such as current and future earning potential and market conditions. The involvement of financial experts, such as forensic accountants or business valuators, is often necessary to ensure an accurate valuation. The calculations become even thornier when business and personal assets are enmeshed.

Consider the following examples of how commingling can complicate the division of assets in a divorce.

• Using business accounts for personal expenses. Suppose a spouse owns a small business and frequently uses the business’s checking account to pay for household bills, groceries, or family vacations. Over time, this commingling of funds can make it difficult to separate which assets are truly part of the business and which are personal.
• Personal investments in the business. In another scenario, a spouse might use a personal inheritance to invest in their business. During the divorce, questions may arise about whether this investment should be considered marital property.
• Shared use of property. If a business owns real estate that is also used for personal purposes, determining how to divide this asset in a divorce can be challenging. For instance, if the family lives in a house that is also listed as a business asset, deciding how to allocate its value between business and personal assets requires careful analysis.

When it comes to financial matters, the stakes in a divorce are high. Not only is there a risk of losing a significant portion of what one spouse may believe to be their separate property, but the complexity of untangling these assets can lead to disputes and prolonged litigation.

Lean On the Experience of a Seasoned Attorney

To navigate asset division challenges, work with a Bucks County family attorney. Lawyers can help ensure that all assets are accurately identified and valued, advocate for your interests, and work to achieve a fair division of property.

Where are you in the asset division process? By understanding the intricacies of commingled assets and seeking professional guidance, you can protect your financial future. Talk to the legal team at Kevin L. Hand, P.C. to learn more. Call 215-968-6602.