You’ve built your business and you’ve married thinking it a ‘happily-ever-after’ deal. It just didn’t work out though. Now you’re ready for a divorce but what about your business? How can you protect it and end up single? Here are 5 things to consider.
The Best Protection Starts before the Marriage
If you have a business and are getting married, protect your future. It may seem harsh, but courts are more likely to uphold a prenuptial agreement than an agreement that comes after the marriage. A prenup is looked at like a business agreement since no marital rights are involved. It defines assets (like your business) as being held as separate property. This takes a good family law lawyer – in fact, two of them. Both parties should be represented by their own attorney which helps show that the agreement is voluntarily and has been drawn up without coercion. It must include full disclosure of all assets and be executed by both parties. It is best to sign this agreement and have it notarized. A prenuptial agreement is one of the best and least expensive ways to protect your assets and will usually stand up in both community property and equitable distribution states.
No Prenuptial Agreement? A Postnuptial Agreement May Help
A postnuptial agreement doesn’t have quite the same standing as a prenup. It must meet all the requirements of a prenuptial agreement. Postnuptial agreements are not honored in all states and are much more likely to be overturned. Once married, certain legal rights impacting property and support are in place and they may be judged to outweigh the postnuptial agreement.
Use A Partnership, Shareholder, LLC And/Or Buy-Sell Agreement
These type of legal agreements are designed to protect the interests of other owners if one owner gets divorced. They may require a prenup and/or a waiver by the owner’s spouse-to-be of any future interest in the business. They may also give the other partners the right (although not an obligation) to purchase shares or the interest of one or both divorcing parties so the business remains in their control.
Pay Yourself, Well
Don’t overlook this one. Pay yourself a competitive salary instead of reinvesting back into the business. If you’ve just put money back into the business, your soon-to-be-ex may claim that she or he is entitled to a larger payment or percentage of the business since there was no benefit derived from it during the marriage. Money went into the business, not the household.
Don’t Employ Or Involve Your Spouse
If your spouse is involved in the business while you are married, all or part of it is more likely to be considered marital property and fall under the property provisions in the state of your divorce. It could be that you about-to-be-ex was actually employed or that they contributed their ideas and time to the business. The more involved your spouse was during the marriage the more he or she contributed to the business and the more likely that the divorce will reward him or her with a share of the business or a percentage of your share in the business.
If you have not protected your business, you may be able to buy out your ex by giving up your share of other assets. A property settlement note with a long-term payout is also a possibility, but you’ll pay interest, too. The last resort may be the sell the business and divide the profits – probably the last thing you want to do. If you own a business, it is important that you protect it as best you can and the advice of a good Divorce Lawyer will be needed. Make sure your divorce attorney understands your position in the business and has the legal expertise to help you through your divorce settlement while protecting your interests.
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This guest post was written by Chad Taylor. Check out his social media here. If you would also like to write for Bizzvnue, click here.
