Do you know how divorce can impact your business? Divorce can wreak havoc on your company in several different ways. That is why it is important to understand what can happen to your business during divorce, and what steps you can take to protect your company.
Different options are available to protect your business depending on what stage you are at in the divorce process. Here are some steps to take to protect your business if divorce is in the future.
Divorce not filed yet? Tips to consider
Create a post-nuptial agreement. Consider executing a post-nuptial agreement to document what should happen to your business in the event of divorce. This can offer some protection than having nothing at all if you haven't started the divorce process yet.
Set up a domestic or foreign asset protection trust. An asset protection trust may help protect your legal entity and keep your business assets from being split during divorce. Asset protection trusts are complex and require significant planning so it is important to give yourself plenty of time to review this option to see if it is right for you.
Divorce filed? What to do to protect your business
If divorce proceedings have already started and you are scrambling to figure out how to protect your business, consider the following tips:
- Keep good records of your business expenses, tax liabilities and other financial obligations that impact your business.
- Remove your spouse from helping with company duties as necessary. If you are not planning to run the business together after the divorce, it is time to start separating or removing responsibilities.
- Get a valuation of the business to get a fair value of your company before divorce negotiations begin.
- Consider giving up other assets to maintain ownership of the business if that is your goal. You may be able to maintain complete ownership of your company if you compensate with other assets, such as a vehicle or property.
- Make payments over an extended time-period. This can help you maintain ownership of the business without draining all of your assets at once.
Every divorce and business is unique. You need to work with your attorney to evaluate your specific needs to make sure all options are considered before going into negotiations and before your divorce is finalized.