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Protect your business during your divorce

| Jan 30, 2020 | Firm News |

When one spouse owns a business, the other spouse may contribute in many ways. They may be an active supporter behind the scenes. 

A divorce that tears your marriage apart threatens your business, too. Plan before your personal life falls apart to preserve your business investment. 

A contract makes your divorce easier 

One of the keys to a successful business is protecting your investment by planning. You can achieve this through a prenuptial or postnuptial agreement. 

The agreement can establish that your business is your separate property. You can make it exempt from marital property and division during your divorce. 

You may agree that your spouse has rights to business assets. If so, the agreement can determine how to appraise the value of the business. The agreement also can set a percentage of business assets that your spouse receives. This approach avoids a costly valuation process and haggling in court. 

The agreement also can spell out any other conditions. If you and your spouse were business partners, it could establish who has the right to buy out the other spouse. 

Keep thorough records of your business 

If you and your spouse do not have an agreement, you can still document yourself as the sole owner. This can make the business exempt from transfer during your divorce. 

Records should detail all financial matters that may come up in divorce proceedings. Identify whether premarital or marital funds were part of your business capital. Keep business and personal accounts separate while also recording all cash transactions. 

Pay fair salaries to both yourself and your spouse. Paying yourself too much or your spouse too little looks bad for you. 

Make a good business deal 

A good business person does not wait for a crisis to happen. She or he expects problems and prepares for them. 

The best business deals benefit both sides. While it sounds cold, take the same approach when preparing for a possible divorce.