The emotional realities of divorce are tough enough as they are but add in the complexities associated with property division and the process can quickly seem overwhelming. This is especially true when a family business is implicated in your marriage dissolution. If you’re not careful with how you approach division of a family business, then you could wind up losing out on a significant amount of financial value, or your business may end up going under.
Once you see divorce on the horizon, then, you need to be proactive in finding ways to protect your business interests. If you’ve never been through a divorce where a business is implicated, then it might be hard to figure out what steps you need to take, but that’s okay. In this post we want to look at some tips you can hopefully utilize to ensure you navigate your divorce in the most advantageous way possible.
Tips for protecting your business during divorce
It may not seem like it at first glance, but there are multiple steps you can take to protect your business. Some need to be taken shortly before or after marriage, while others can be taken once divorce proceedings have been initiated. These steps include the following:
- Considering a prenuptial or postnuptial agreement: These contractual agreements, which can be entered into before or after marriage, specify how assets will be treated in the event of divorce. Therefore, you could specify that your business will be deemed separately owned property if divorce were to occur, which will entirely remove it from the property division process.
- Keeping the business separate from marital property: If you owned your business prior to getting married, then the best way to protect your interests is to continue to maintain the business as separate property. This means keeping its finances separate from your marital finances and refraining from using marital funds to invest in the business. You might also want to limit your spouse’s involvement in the business to keep it as separated from your marriage as possible.
- Securing a proper valuation: If it looks like your business is bound to be looped into the property division process, then valuation can be key. If your business isn’t properly valuated, then you could end up with the short end of the stick. You should therefore carefully analyze the various valuation methodologies available to you and choose the one that’s most advantageous to your position and that’ll be best received by the court.
- Negotiating a buyout: If you really want to keep your business once your divorce is finalized, then you might want to consider buying your spouse out of their ownership portion. Again, valuation can be key here, as it might specify the appropriate amount you’ll need to pay to secure sole ownership of the business. Before making this decision, though, be sure to fully analyze the financial picture before you so that you can make the fully informed decision that’s right for you.
Don’t lose out in your divorce
There are a lot of things that can go wrong during the marriage dissolution process. And if you don’t aggressively advocate for your interests, then you could be at a financial disadvantage for years to come. That’s why now is the best time to think through your legal options and how best to act on them. With strong evidence and powerful legal arguments on your side, you can increase your chances of securing the short-term and long-term outcomes that you want and deserve.