Divorcing is rarely easy, but for those who own a business, it can quickly turn into a nightmare, not only for the divorcing spouses but for those who depend on the business. If you and your spouse face a divorce and you worry about the implications for your business, it is wise to understand how the law affects your circumstances before you begin building your divorce strategy.
Depending on the steps you took to protect the business from a potential divorce, when you created the business, and the involvement of your spouse in the business, you may find it difficult to keep the business off the table during property division. If keeping the business intact is a priority, an experienced attorney can help you assess your strengths and weaknesses in the divorce and build a strategy that focuses on protecting your rights and as well as the business.
Consider your available protections
If you thought to protect your business with a prenuptial agreement, this is good news. However, the mere existence of a prenuptial agreement is not always enough. Be sure to review the document and identify any grounds your spouse may have to challenge it.
If you do not have a prenuptial agreement protecting the business, consider proposing a postnuptial agreement. In cases where both spouses understand the importance of keeping the business running, a postnuptial agreement can provide some hedge of protection keeping it off the table. However, this is a risky move. Postnuptial agreements do not possess the same legal strength as a prenuptial agreement, and you may simply succeed in confirming for your ex that you highly value the business and worry about his or her actions towards it.
Create as much separation as possible
If you can demonstrate that the business is sufficiently separate from your personal life and personal finances, then you may have grounds to claim it is not a part of your marital property. This is not easy, but is sometimes possible.
In order to attempt this, you must take great care to keep your spouse as distant as you can from the business. If he or she works for the business, you should terminate the employment or halt other forms of indirect influence.
You must also pay yourself fairly to avoid claims that you withheld funds from your marital finances. Be sure to keep your business finances completely separated from your personal finances, and do not commingle business and personal funds or purchases.
Also, it is important to keep your accounting impeccable and leave very little room for argument that you operate your business separately from your home.
Consider other assets you can sacrifice
If your business is the primary priority in your divorce, then you may need to sacrifice other assets to make up the difference in your spouse's claims against it. If your spouse does deserve some portion of the value of the business, you can offer him or her other assets to cover this portion, or even work out a payment plan over time. While this marriage and divorce may soon be behind you, your business has the potential to help you recover and rebuild your life on the other side.