The "happily ever after" doesn't always happen as many married couples imagined when they walked down the aisle. In fact, recent statistics show that 52 percent of first marriages end in divorce. In addition, 70 percent of second and third marriages end up in divorce court. When a business is involved, though, the divorce can become much more difficult.
While you may have spent years growing your business, you may have done some things that put it at risk if you divorce. Depending on what your individual circumstances may be, your spouse could walk away with up to 50 percent of your business. Tennessee is an equitable distribution state, meaning that settlements in a divorce must be fair but equal.
-- Prenuptial and postnuptial agreements: If written correctly, a prenup or postnuptial agreement can protect your business. However, it must be in writing, executed voluntarily, no assets can be withheld and it must be executed by both parties. This is probably one of the best ways to protect your business from divorce.
-- Don't involve your spouse in your business. If you don't involve your spouse in your business and you had it before you got married, you could claim that the business is separate property. However, it's important to realize that if there is any involvement from your spouse in the business, then it will be considered community property.
-- Pay yourself a salary: If you invest everything you make back into the business, you spouse might claim that he or she should be entitled to more money because he or she didn't get any benefit from the money since it didn't go into the household.
Divorce can be very difficult, but when a business is involved, it's important to have an attorney who is experienced in complex and high asset divorces.
Source: Inc., "How to Protect Your Business in a Divorce," Jeff Landers, accessed July 15, 2016