Don’t lose your business in your divorce

When divorce comes knocking, you and your family might not be the only ones whose lives change drastically. For business owners, the prospect of divorce is even heavier than for other spouses, because the law generally considers a business to be marital property.

Plainly speaking, this means that your employees, and clients may also suffer if your spouse puts your business on the chopping block when it comes time to negotiate your divorce settlement.

The best way to prevent this kind of difficult situation is through a prenuptial agreement. However, if you did not create a prenuptial agreement, there are still actions you can take to keep the business intact.

The truth is, attempting to keep a business from breaking apart in your divorce is not easy, and there are no guarantees. However, with some strong, decisive action and the guidance of an experienced attorney who can help you navigate this tricky area, saving your business is possible — but, you need to act immediately.

You must act quickly for the sake of the business

In order to hope to save your business, you must decide that it is a priority over other assets that your divorce negotiation may divide up. This is not easy, but it is wise.

As soon as you see divorce as even a possibility, you should consider approaching your spouse with a postnuptial agreement that protects your business while compensating them fairly. While this is not as preferable as a prenuptial agreement, it is a good option.

Even if you cannot secure the postnuptial agreement, you still have some options.

Begin by keeping the best records that you can, and keeping your family finances as separate as possible from the business finances. This means you shouldn't spend company money on things for the family, and you shouldn't spend you personal money on the business, such as borrowing against your home for it.

It is also very important to pay yourself appropriately to your industry. If the average business owner in your line of work with comparable success brings home $250,000 yearly, and you only bring home $150,000 per year to leave more money in the business, you create vulnerability in your divorce negotiation. Your spouse can claim that you have withheld money that should rightly go to the family.

Also, you must completely remove your spouse from any and all business involvement. If your spouse currently works in the company somehow, you must fire him or her. If they continue their involvement in the company, you will face great difficulty keeping it intact. The greater their involvement, the greater their legitimate claim to the business as a marital asset.

Know what you have and what to sacrifice

Protecting your business is very difficult if you do not know its actual worth. It is wise to have your business professionally valued. This way, your spouse cannot claim that it is worth much more than it actually is.

Once you know the value of the business, you have a broad idea of what you must sacrifice in order to keep it. This might mean that you offer your spouse other assets in the settlement, such as the family home, vehicles, other real estate, or investments and savings.

Don't approach this battle alone

It is never easy to try to save a business in a divorce. However, you do not have to — and should not — walk through this alone.

With proper legal guidance from an experienced attorney, you can rest assured that your business's future is in good hands and that your rights remain secure as while you fight to keep the business intact in this difficult season.

Source: Nov. 30, -0001

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