How to Protect Your Business in a Divorce
In a divorce, all assets are subject to split—even businesses. Splitting up a business can be a complicated proposition. When your marriage ends, it could end your business as well if you’re not careful.
That’s why you need to take the appropriate steps to protect your business now—even if you’re not considering divorce. But what can you do? Here are some steps you can take.
Get a Prenuptial/Postnuptial Agreement
While it may not sound romantic to ask your future husband or wife to sign a document that details how your assets will be split in a divorce, such an action is truly necessary if you want to protect yourself financially. Even if you start your business after you get married, you can protect yourself with a postnuptial agreement. Such a document can outline what will happen to your business, how it will be split and what it is valued at.
Keep Finances Separate
Don’t mix household income with business revenue. This makes it harder to figure out which money is your and which is your spouse’s in the event of a divorce. This means you shouldn’t use your home or personal vehicle as collateral for a loan.
Remember to Pay Yourself
Don’t just keep reinvesting money into your business. Make sure to pay yourself a decent salary. That way, if your marriage does end in divorce, there is less money to give to your spouse.
An insurance policy can cover your business and provide extra money should you need to split your business in a divorce. You can give your spouse their half of their business without having to take out a loan or sell your company.
What if You Didn’t Protect Yourself?
Marriage needs to be treated like just another business proposition. However, many business owners are not prepared for the reality of divorce. Not every marriage lasts forever, so ideally you should be prepared. If you have no prenuptial agreement or other protection in place, there are some things you can do, but they are not as desirable.
If you really want to keep your business, you could offer your spouse other assets. Let him or her have the marital home, the vehicle or a retirement account. Chances are, your spouse really doesn’t want to be part of your business anyway. They just want the value of it.
If you agree on a settlement, you could opt to make payments over time instead of handing over a lump sum. This option will help protect your business.
Seek Legal Help
As soon as you start your own business, you should take steps to protect it. You have invested a lot of time and money into it, so don’t lose it all in a divorce.
Fort Lauderdale divorce attorney Edward J. Jennings, P.A. can help you understand what you need to do to protect your business and other assets. To learn more, schedule a consultation today. Call 954-764-4330 or fill out the online form.