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Can I protect my business in a divorce?

It is not uncommon for entrepreneurs to refer to a business venture as "their baby." After all, they may have nurtured it from birth, putting in long hours and spending nights tending to it as if it were an infant who was totally dependent on its parents. As the business grew, the entrepreneur became proud of its accomplishments and even entrusted its growth to other people. Suffice it to say, the relationship between an entrepreneur and a business may become more important than the entrepreneur's marriage.

If this sounds familiar, you are not alone. For many different reasons, small business owners face divorce. While the marriage may be over, the business certainly is not, and they don't want to sacrifice their business because of a divorce.

While the following is not legal advice, this post will provide some talking points to discuss with an experienced family law attorney.  

Could a prenuptial agreement apply? - Chances are that a prenuptial agreement will detail how the business will be identified for asset division purposes. If there is no such agreement, perhaps a postnuptial agreement may serve the same purpose.

Detailed accounting -  The argument could be raised that the business was created and/or funded with marital property, and that because of this, your spouse has ownership over (or is entitled to) a portion of the business. However, specific and detailed accounting may show that the business was supported by non-marital assets, especially if it was created prior to the marriage.

Make a deal - It may be possible to protect the business by offering your interest in other marital assets, such as real property, investment accounts or other securities, in exchange for keeping the business.

Because every divorce is different, there is no standard way of protecting a business. However, consulting an experienced family law attorney is a worthwhile first step.

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