Divorce is sometimes a messy business, especially when it actually involves a business. Many business owners have ended their marriages and seen the divorce end the business along with it. In part, this is due to the way that the law classifies businesses, counting them as property that a couple may own jointly.
If you own a business and also face an imminent divorce, you may have some difficult choices ahead. Without a strong divorce strategy, you may end up dissolving the business or divesting your ownership to pay your ex-spouse their share of ownership. Keeping a business together through a divorce is possible, but rarely easy. Don’t wait to begin building your divorce strategy, for your own sake and for the sake of those who depend on the business you own.
All business owners should have a prenuptial agreement
One of the few ways to keep a business protected from divorce is to create a prenuptial agreement. If you have a prenuptial agreement that protects your business from property division, don’t assume that you’re out of the woods just yet. It is still wise to look over the agreement and understand any weak points in the document that your spouse may try to challenge.
If you do not have a prenuptial agreement, then your business probably qualifies as marital property and is available for settlement negotiation. If your spouse has little or no involvement in the business, you may still successfully claim the business as separate property, if you build your strategy properly.
Understanding the value of your business
Depending on your relationship to the business and the nature of the business itself, it is rarely easy to understand the exact value of your ownership. Unfortunately, businesses count as personal property much like a vehicle or home, but are typically much more complicated to value.
If you suspect that you cannot keep your business off the property division table during divorce negotiation, you will want to have the business professionally valued. This helps ensure that your spouse doesn’t overvalue the business and attempt to negotiate an unfair settlement.
Ultimately, you must decide if keeping the business afloat through your divorce is a priority. If it is, then you must understand the sacrifices ahead and build a divorce strategy that supports this goal. With clear understanding of your priorities and focus on your long-term needs and goals, you can keep your rights protected throughout your divorce and land on your feet when the smoke clears.