I am a part of a business with two other people who are husband and wife. Unfortunately, they are about to get a divorce. I am wondering if the state will consider the nonprofit softball league that we run as marital property to be divided in the divorce? Is there anything I can do about it? I don’t want to be put in the middle of something I’m not prepared for.
The nonprofit softball league should not be considered marital property. Nobody “owns” a nonprofit.
Unless one of the couple has been treating the league as his or her “alter ego” and considering its finances part of his or her own, the league is not the personal property of either the husband or wife. It stands alone outside the marriage. There have been a few cases in which courts have sought to “pierce the corporate veil” to treat a nonprofit as personal property (See Nonprofit Issues®, 11/1/07), but they are very rare and you should have a good sense about whether such a claim would have a chance of being successful.
I would talk with the couple about the issue to be sure that neither of them has any desire to change the status of the league. If it is a corporation, there are probably other directors and officers, but even if the three of you are the only officers and directors, you may be able to expand the group so that it can continue while they work out their other differences.
You may have a more direct concern about the division of the business, especially if it is your livelihood. You want to be sure that it can continue, and you can continue as well.
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