If you own a business and also face divorce, you may have a series of difficult decisions in your immediate future. Many business owners do not realize that a business can qualify as marital property just like a vehicle or a home, and when it comes time to divide marital property in the divorce process, the business itself may end up on the negotiation table.
First, it is wise to determine if the business is actually in substantial danger. If you had the presence of mind to use a prenuptial agreement to protect your business, this is probably good news. If you do not have such an agreement, your business still may not count as marital property, if you can make a strong case that your personal and professional finances are sufficiently separate and that your spouse did not contribute meaningfully to the business during your marriage.
If you suspect that you may have to consider the business in the negotiations, you may need to sacrifice other assets to keep the business intact. You may benefit from an in-depth business valuation to establish what the business is actually worth so that your spouse does claim he or she is owed more than a fair share. If you do not have liquid assets to offer your spouse at the time to offset his or her claim to some portion of the business’s value, you may need to work out a payment plan over time.
Do not take this matter lightly, especially if you have employees who depend on your business for their livelihood. Be sure to carefully examine all the legal potions you have to keep your business safe and set you on solid footing once you weather the divorce and come out the other side.
Source: Entrepreneur, “How to Divorce-Proof Your Company,” accessed June 01, 2018