How do I protect my business in a divorce?

If you and your spouse own a business, it may be subject to division as part of a divorce. How can the business be protected in a divorce? Planning ahead should there be a divorce is essential. There are ways to protect a business including the couple agreeing to a prenuptial agreement prior to the marriage in that the couple getting ready to marry decides how to address dividing the business, its equipment and its value should they divorce.

Often soon-to-be couples choose not to have a prenuptial agreement. Most couples do not even give one any thought. Not having a prenuptial agreement opens the business up to division in a divorce. This may be true if the business was created before the marriage. Dividing a business during a marriage includes valuing the business, its equipment, its real estate and its holdings. It may be necessary for each person to hire an accountant to value the business in what it is worth. Hiring an accountant as an expert gets expensive very quickly.

A court also has to look at the structure of the business if it is a corporation and if there are shareholders. Corporations may not allow an unmarried spouse to inherit shares in the company if the business is a corporation. If the company is a sole proprietorship, the owner of the business may reduce the amount a spouse receives by paying himself or herself a higher salary during marriage.

Dividing a business includes looking at the income it has earned over the years and its business expenses. It is very important that business owners keep good tax and business records because they will need to be examined. Poor record keeping can complicate the divorce process.

Consulting with an experienced family law attorney prior to the marriage or prior to a divorce helps business owners plan to help protect the business and its future income.

Jessica Sterle

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