When you realize that it is time to begin building your divorce plan, there are many aspects of your personal, financial and professional lives that you must consider.
Before a court approves your divorce, you must reach a property division agreement with your spouse, and this may involve more than just savings accounts and family heirlooms. As a business owner, your business itself may qualify as marital property, meaning that your spouse may have a valid claim to some of its value.
If you created a prenuptial agreement before your marriage, look to see what, if any, protections it offers your business. In the absence of a prenuptial agreement, you may have to weigh your priorities carefully, especially if the divorce threatens to shutter the business completely.
Before you move further in your divorce strategy, make sure that you understand how to keep your business intact while keeping your other rights protected.
Does your spouse have a valid claim?
Depending on your spouse’s involvement in the business, the length of your marriage and several other factors, your business may not automatically qualify as a marital asset. If you can make a compelling case that your spouse does not have a valid claim to the value in the business, then a court may agree to leave it out of property division.
Consider the involvement that your spouse has in your business. Is it a family restaurant where you both work and regularly shift money between your family finances and restaurant finances? Is the business a partnership you entered well before your marriage that never involves your spouse in a meaningful way? The details of your circumstances matter, so it is important to examine them through the eyes of the law.
Look at your business finances to ensure that they are well organized. Keep your family finances as separate from your business finances as possible. This helps to establish separation between your personal and professional lives.
If your spouse has little or no involvement in the business, then you can further demonstrate this separation. Keep this in mind if your spouse suddenly becomes interested in business matters and wants to get involved.
Sacrificing for the business
You may have no choice but to compensate your spouse for some portion of the business. If you hope to retain ownership and keep the business alive, then you may need to exchange other assets with you spouse. Depending on the nature of the business and its ability to earn you an income, trading other assets such as real estate or savings may make the most sense.
If you do not have the assets available to satisfy your spouse, you might consider setting up a payment plan to keep the business intact and move forward.
Whether your business is safe and sound or requires significant sacrifice to keep afloat, you should not enter your divorce without a clear strategy to achieve your goals. Do not hesitate to use all the resources at your disposal to keep your rights protected while you weather this season and build toward the next.