Divorce can significantly impact your personal and professional life, especially if you own a business. Business owners going through a divorce are wise to take steps to safeguard their business interests to help better ensure that the business remains viable and protected throughout the process. Three tips to help mitigate the impact of the divorce on business operations include the following.
#1: Understand the legal framework
The first step in protecting a business during a divorce is to understand how local laws treat businesses owned by one or both spouses. In many places, state law would consider a business marital property if the owner started or developed the business during the marriage, even if only one spouse is the official owner. Knowing the legal framework helps you anticipate potential claims and prepare more effectively.
#2: Review potential strategies to protect your business
There are many legal strategies that can help to protect a business during divorce. Two of the more common include:
- Pre- or post-nuptial agreements: These legal documents can specify what happens to the business in the event of a divorce. They can be instrumental in protecting your business assets as separate from marital assets. As the names imply, the parties enter a pre-nuptial agreement prior to the marriage and a post-nuptial agreement during the marriage.
- Negotiations: If a pre- or post-nuptial agreement is not present, consider moving forward with negotiations wisely. Get a business valuation and discuss providing the other spouse with another asset of similar value in exchange for full retention of business interests.
Make sure to carefully review any divorce settlement agreement to better ensure that it reflects your expectations.
#3: Delegate as needed
Any savvy business leader knows the power of delegation for business matters. The same holds true when going through a divorce. A team of professionals can work to protect your interests while also setting you and your children up for success after you finalize the divorce. This can include valuation professionals to make sure you get an accurate estimate of the worth of complex assets, a financial advisor to assist in evaluating the financial implications of the process, as well as an experienced divorce attorney to better ensure you understand your rights and options throughout the divorce.
Divorce does not have to spell disaster for your business if you prepare adequately and take protective measures. You can safeguard your business and emerge from the divorce with your professional interests intact.