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Divorce Need Not Break The Family Business

It is commonly alleged by one spouse that the other spouse’s corporate stock is a martial asset subject to equitable distribution. Equitable distribution is the process by which the judge divides the couple’s assets between the husband and wife. But the fact that one spouse’s shares are part of the marital estate is legally insufficient to permit the company to be joined as a party.

Simply stated, the company isn’t getting divorced from anyone and normally should not be a party in a divorce action. This is true even if financial information is needed from the company. The company doesn’t need to be a party in order to obtain financial information relevant to equitable distribution, child support or spousal support.

Joinder of corporate defendants in dissolution proceedings have been permitted in two contexts. First, joinder is permitted where a spouse has an independent cause of action against the corporate defendant. In one case, for example, the wife alleged that the corporation had intentionally watered down the wife’s stock ownership. Because the wife stated a separate claim apart from the company being a marital asset, the claim was allowed to proceed.

Alternatively, joinder may be appropriate where the spouse’s interest is so inextricably intertwined with the corporation that there is a complete blending of corporate assets with personal assets. That is, if the spouse is paying all of the household bills from the company’s bank account, joinder may be permitted.
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