As a business owner, you have invested countless hours and resources into building your enterprise. But what happens if your marriage dissolves? Protecting your business during a divorce is crucial to ensure your hard work does not go to waste.
Below are strategies you may consider to protect your company and maintain control in the face of marital discord.
Establish clear ownership from the start
One of the most effective ways to protect your business is to establish clear ownership before any marital issues arise. Consider the following steps:
Create a prenuptial agreement
This legal document could specify that your business remains separate property in the event of a divorce.
Keep business and personal finances separate
You may want to maintain distinct bank accounts and credit cards for your business and personal expenses.
Document your contributions
It may help to keep meticulous records of any personal funds or assets you have invested in the business.
Pay yourself a competitive salary
This could help demonstrate that you are not undervaluing your work to hide income from your spouse.
These steps could help prevent complications should you and your spouse divorce.
Implement protective measures during marriage
Even if you could not take precautions before marriage, you could still implement protective measures. You may want to consider the following:
Draft a postnuptial agreement
Like a prenup, this document could outline the division of your business assets in case of divorce.
Create a buy-sell agreement
A buy-sell contract could stipulate that your spouse must sell their interest in the business back to you or other partners if you divorce.
Establish a trust
You may consider transferring business ownership to a trust to help protect it from qualifying as marital property.
Involve other family members
You may want to bring your relatives into the business as partners or shareholders. Doing so could dilute your spouse’s potential claim.
Laws vary by state, so you may want to consult an attorney to ensure that your chosen strategies are legally sound and appropriate for your situation.
While it may be uncomfortable to contemplate divorce, protecting your business interests is a prudent step that may provide peace of mind and financial security for years to come.