You have spent substantial time and resources developing your business. It may be one of your most significant assets. Unfortunately, you and your spouse are divorcing and you are rightly concerned about your business’s future. Divorce can quickly weaken a business’s integrity, perhaps destroying the company altogether.
However, you may be able to protect your business from dissolution and uphold its integrity. Do you know how to guard your company from the ill-effects of a divorce?
Proper planning offers substantial reward
The easiest way to protect your business is to implement a plan before divorce is even a consideration. It is best to situate a business plan before marriage, but you may also have options after your marriage is finalized. Consider some of the following suggestions to protect your business’s financial future:
- Pre- or postnuptial agreements: You can establish what will happen to your business in the event of divorce with a pre- or postnuptial agreement to prevent its division if marital property is split. A prenuptial agreement tends to hold up better in court, but a thorough postnuptial agreement may also suffice.
- A competitive salary throughout marriage: Pay yourself a regular income instead of reinvesting all profits back into the business. Contributing an income to marital assets prevents your spouse from strongly arguing that they deserve a greater share in your business’s assets during divorce. They will have already fairly profited from it during marriage.
- Business agreements: You can establish buy/sell, partnership or shareholder agreements to prevent business dissolution in the event of divorce, incapacitation or change of ownership.
Sometimes planning is not enough
You may not have implemented a plan to prepare for divorce, or your plan may have fallen through. Either way, you may still be able to work with an attorney to protect your business interests. For example, they can evaluate the possibility of giving your spouse the family home or other significant assets in exchange for maintaining full ownership of the business. An experienced divorce attorney will carefully evaluate your situation to provide the guidance you need.