From a financial standpoint, there’s a lot at stake in your divorce. Since your spouse will be entitled to half of the marital estate, part of the dispute that you’ll face will focus on which assets are marital in nature and which should be considered separately owned property. This can be a massively important distinction, especially if you own a business. This one asset can carry a tremendous amount of wealth. If it’s mishandled during your divorce, though, then you can end up losing out on more than is just.
What can you do to protect your business from divorce?
Fortunately, with a little foresight and proactiveness, you can take steps to protect your business from the worst divorce outcomes. Here are some of those steps:
- Enter into a prenuptial agreement: A prenuptial agreement can specify financial obligations during marriage and how assets should be divided in the event of divorce. But it can also specify which assets will be kept separately from the marital estate. Therefore, a well thought out prenuptial agreement or postnuptial agreement can entirely remove your business from the equation.
- Keep your business and family finances separate: If you want to keep your business as a separate asset and thereby reduce your spouse’s claim to it in divorce, then you’ll want to keep business-related finances separate from your family’s. Don’t use your business accounts to buy personal items or fix up the home, and don’t use your personal accounts to buy things for your business.
- Pay yourself a fair salary: If you shortchange your salary paid to you from your business, then your spouse may argue that they’re entitled to a larger share of the business and its assets since they would’ve otherwise been better financially situated.
- Release your spouse: If you can, it might be a good idea to relieve your spouse of their duties related to the business and ease them out altogether. The lesser the role they play in the business, the less of a claim they might have to it in divorce proceedings.
- Get a proper business valuation: If your business is likely going to be subjected to the property division process, then you’ll want to make sure the value of it is clear and accurate. Therefore, you’ll need to ensure that you use the right valuation method and your business’s assets and liabilities are fully understood.
- Place the business in a trust: By doing this, you lose ownership of the business because you transfer that ownership to the trust. As a result, the business may no longer be considered a marital asset.
- Create a buy-sell agreement: One of these agreements could limit your spouse’s access to business resources and control. It can also ensure that the business continues to run smoothly even if partial ownership is transferred to your spouse.
Use the legal system to your advantage
Although getting divorced can be enormously stressful, and the legal nuances of your case may feel overwhelming, you should take comfort knowing that the law may provide you with the protection that you need. However, you can only use the legal system to your advantage if you know what the legal system has to offer you.
That’s why many individuals who are going through the divorce process find it comforting to have a legal advocate on their side. A strong advocate can advise you as to your legal options and guide you toward the decisions and outcomes that best position you for a positive resolution to your divorce.
So, if you want a legal ally on your side, then now may be the best time for you to reach out to a firm to learn more about the best path forward.