If you intend to file for divorce in the near future, or your spouse is considering getting divorced, then you might be worried about the business that you own. After all, you have probably spent a lot of time, money and energy growing your company and after going through a divorce, the last thing that you want is for your ex to be your partner. So, what does divorce do in terms of the ownership of your business, and what can you do to protect it in advance?
The Effects of Divorce on Your Business:
If you own a business, getting divorced can put you in a situation that you don’t want to be in. You could end up being forced into a business partnership with your soon to be ex, or you may be required to give up half of the business in community property or equitable distribution states. While neither of these scenarios are probably what you have in mind, they could be inevitable if you do not take advance steps to protect your company before the divorce is finalized.
Giving up half of the business could mean that other assets can be paid to your ex, for example if you own assets such as property, cars, stocks, retirement accounts and more, that you owned as a couple, these can be divided between yourself and your ex-spouse so that your ex gets an extra share of the assets and you can keep your business in its entirety. Another option could mean that your business goes into liquidation, with both yourself and your ex-spouse splitting the proceeds.
Could Your Divorce Cost You Your Business?
If you started your business before the marriage, then the good news is that the divorce may not have any impact on it if you can prove that it is able to remain your separate property. However, the problem here is that many businesses can lose their separate property status after marriage. For example, if your business has increased in value during the marriage, the increase could be viewed as marital property. The same may apply if your spouse contributed to your business or if it was formed after the marriage.
Protecting Your Business:
To protect your business in the event of a divorce, it’s a wise idea to get advice from an experienced law firm like charlestonlaw.net, who can advise you on the next steps to take. If you don’t already have a pre-nuptial agreement in place, then a post-nuptial agreement can be formed, however, bear in mind that these are not always upheld by the court. A buy-sell agreement is also a wise idea; this protects your business in a range of situations including divorce. Pay yourself a salary so that you are getting a draw from the business rather than reinvesting back into it, and keep personal and business expenses separate. Finally, make sure that your soon to be ex-spouse is not working for, or is in any other way, involved with the business.
If divorce is on the horizon in your marriage, it’s important that you take steps to protect your business as soon as possible.