Every divorce has its complications. In many cases, it’s the emotional aspect of marriage dissolution that leaves individuals struggling. But the logistical and financial aspects of your divorce can also be challenging to navigate, leaving you with a significant amount of stress and uncertainty.
These concerns can be amplified when you own a business. You might be worried about how your marriage dissolution will impact your business operations and your financial stability, both of which can significantly impact your future. You can also be concerned about the legacy and reputation that you’ve built. That’s why you need to be careful as you navigate your divorce if you want to protect your interests.
What you need to consider in a divorce involving a business
In addition to the usual divorce legal disputes that you’ll face, you’ll also need to address business-specific issues. This includes each of the following:
- Individual asset analysis: Your business and its assets are only going to be subject to property division if it can be shown that they’re marital assets. This can be a tricky issue to address when you owned a business prior to getting married. If you’re in that situation, then you’ll need to consider whether your spouse has contributed to the business in some fashion or if business assets have been commingled with those that are marital in nature. These actions can transform individually owned property into marital assets.
- Business valuation: Since marital assets are going to be divided with your spouse, you’ll need to have a proper valuation of your business. If you don’t, then you could end up giving away more than necessary, which can negatively impact your financial future. There are many methods of valuation, too, so you’ll want to advocate for the strategy that makes the most sense and puts you in a stronger position.
- What you want out of the future: Although you might want to put in the work to figure out how to maintain your business even after your divorce is finalized, some people simply don’t want to deal with that. After all, it might mean that your spouse takes an ownership interest in the business. In those instances, you might be better off selling the business and splitting the assets with your spouse.
Are there ways to avoid business issues in your divorce?
Yes. On the front end of your marriage, you can consider doing the following to protect your business interests:
- Enter into a prenuptial agreement where you specify how your business will be handled in the event of divorce.
- Keep your spouse away from your business operations so that there’s a clear divide between them and your business.
- Keep all business assets separate and distinct from marital assets.
- Enter into a postnuptial agreement after getting married that specifies what will happen to the business if your marriage dissolves.
- Pay yourself a good salary, as investing money back into the business at the expense of your salary could give your spouse a greater interest in the business and its assets.
- Carefully choose your business structure when creating your business so that you can divorce-proof it as much as possible.
Enter your divorce with confidence
Dealing with a divorce involving a business can be complicated. And if you mishandle any aspect of it, then you could be setting yourself up for financial hardship. To avoid that from happening, you need to have a firm understanding of the process and how to utilize it to your advantage.
This means that you need to know how to gather evidence, make advantageous decisions throughout the process, and develop persuasive negotiation and litigation strategies. Even though that sounds complicated, and it truly can be, you should take comfort in knowing that you can find ways to support yourself and zealously advocate for the outcome that you want.
