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Ely
Ely, Attorney
Category: Business Law
Satisfied Customers: 100053
Experience:  Counselor at Law.
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I am in Wisconsin. I am in the process of completing a

Customer Question

I am in Wisconsin. I am in the process of completing a divorce. I want to start up a new business and understand I will need to hire a lawyer to do so (i.e. whatever structure I choose). I understand that the profits will not be instant. I do not want
access to the profits for the next 2 years for myself - I do need to know legally how to structure this business so that they profits are not a liability (taxes) for at least the next 2-3 years and then I can have access to them. I also want to know how I
would access those profits to reinvest in materials, advertising, etc without creating legal or tax issues for myself. Would it be better to put my business in a trust or under a different name? Or is there some type of structure that will shelter me from
this - until my divorce is complete.
Submitted: 1 year ago.
Category: Business Law
Expert:  Ely replied 1 year ago.

Hello and welcome to JustAnswer. Please note: (A) This is general information and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms; and (B) please wait to rate until I ask you to do so. It may take a few replies for me to be able to render an complete answer. I will let you know when I do.

Is your main concern that your soon to be ex will seek to claim that part of the business profits should be his? Or is your main concern tax liability?

This is not an answer, but an information request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.

Customer: replied 1 year ago.
This is my concern: Is your main concern that your soon to be ex will seek to claim that part of the business profits should be his?
Expert:  Ely replied 1 year ago.

Thank you.

Then the best way to avoid this is do the following:

1) Use money which was owed by you prior to marriage or inherited. This way, the business that comes from this money may not be considered community property since the money used to start it was separate, and

2) More importantly, file for a Motion for Temporary Orders, asking the Court to CONFIRM that the business would be considered separate, while the suit is pending.

3) The corporate structure of the business matters less than where the money comes from and how the Judge rules.

I hope this helps and clarifies. Please use the SEND or REPLY button to keep chatting, or please RATE when finished. You may always ask follow ups at no charge after rating. Kindly rate my answer as one of TOP THREE FACES/STARS and then SUBMIT, as this is how I get credit for my time with you. Rating my answer the bottom two faces/stars or failing to submit the rating does not give me credit and reflects poorly on me, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith by rating me positively.

Customer: replied 1 year ago.
I would be using money that was gifted to me before the divorce and has already been ruled as non-marital property. Moving forward - after the divorce is final - in February -but my understanding is it would matter in the future what happens with my business and the divorce (i.e. child support and or alimony payments to me) - if it's outright my profit/income coming to me. Because it will not be consistent at all - I do not want it to be the basis for anything for at least the next 3 years.
Customer: replied 1 year ago.
This is what I read online:3. Place the business in a trust. This keeps the business from being counted as a marital asset as you no longer personally own it. The move also protects the value of the company's growth.
Expert:  Ely replied 1 year ago.

I would be using money that was gifted to me before the divorce and has already been ruled as non-marital property.

Great. The presumption is that the business would be separate too as well. However, it is still highly recommended to get this confirmed by the Court via a motion.

Moving forward - after the divorce is final - in February -but my understanding is it would matter in the future what happens with my business and the divorce (i.e. child support and or alimony payments to me) - if it's outright my profit/income coming to me. Because it will not be consistent at all - I do not want it to be the basis for anything for at least the next 3 years.

If you wish not to have income, all you have to do is to have a corporate structure such as an LLC, S-Corp, S-Corp, etc, and not pay one's self. The money coming into the business would simply sit in the account and/or be reinvested into the business (latter recommended).

This is what I read online: 3. Place the business in a trust. This keeps the business from being counted as a marital asset as you no longer personally own it. The move also protects the value of the company's growth.

Not always true. A trust may be pierced, especially if it is a revocable trust. This step is not always recommended. Everyone is talking about putting a business into a trust nowadays. It is "trendy." But it is not the cat's meow, and often needless.

Gentle Reminder: Please, use REPLY or SEND button to keep chatting, or RATE POSITIVELY and SUBMIT your rating when we are finished. You may always ask follow ups at no charge after rating.

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