Nobody gets married and hopes their union will end in divorce. Partners build that special bond, a kind of relationship that promises to get them through the good times and the bad ones. Just as you get insurance policies to protect yourself and your loved ones from untimely or unexpected situations, if you own a company, it is important to protect it in case of a divorce. This idea may be inconceivable at the moment, but it will be helpful if you ever get divorced.
The contract option
A formal agreement can help facilitate a resolution and probably ease anxieties for the divorcing partners during the period when emotions are likely to be running high. A prenuptial agreement (one is drawn and executed before marriage date) or even a postnuptial agreement details the guidelines regarding business valuation and how its assets will be divided in the event of a divorce.
For instance, the agreement may specify that your business is a separate property that isn’t subject to division, the value achieved after the marriage will be marital property or the spouse who will buy the other out of business during the divorce process.
It is also possible to include all other conditions you choose to agree upon and structure the agreement the way you want. Remember to address all important issues to minimize ambiguity during separation.
Consult with an experienced attorney
The diversity of relationships, business owners, business types, and state laws make every divorce case very unique. If more factors are involved, the divorce case will be more complex. Keep in mind that state laws vary significantly and there are different factors that must be taken into account during a divorce settlement. Some of these factors include the type of business, industry, legal structure, the specific assets associated with the business, children, your partner’s role in the business, and more.
Even if you’re single, in a common-law partnership, you will need to work with a lawyer especially when handling various business issues. Note that an attorney with in-depth understanding of business owner divorces can help you handle the process effectively. Ask for referrals from friends, colleagues, and close family members to get a good attorney.
There are different ways of protecting your business. And they must be in place long before you begin the divorce process. One of the effective ways of reducing the impact of a divorce on your company operations is to award yourself a competitive salary. Using a partnership, LLC or a shareholder agreement is also an excellent protective measure.
There is no divorce process that is easy, and the process might be more complicated if there is a business to be valued and dived. It is also upsetting to watch something you have been working so hard to achieve get taken by your ex-spouse. Therefore, you should work towards protecting your business long before the divorce process starts.