If you feel your marriage is starting to go downhill, you may want to start thinking about how to protect your assets in the future. Wanting to keep a business during divorce is understandable, but it can take some work. Depending on when the business was formed and what stage your marriage/divorce is in, there are a variety of options that may be available to you.
Preemptive Actions Before Divorce
- Prenup – Signing a prenuptial agreement prior to the marriage is a great way to protect a business during divorce if you designate it as solely your property.
- Postnup – If you get a postnuptial agreement soon after the marriage, and long before any marital problems, you can still designate the business as yours to protect it during divorce.
- Buy/Sell – Creating a buy/sell agreement allows you to purchase your ex’s share of the business following divorce. You can make payments over time or pay it all in a lump sum.
- Trust – No, don’t trust your ex to just let you have the business. Place the business into a trust so that the company, and its growing value, remain protected since they belong to the trust and not you.
Options for Protecting a Business Soon Before or During Divorce
If you do not have a preemptive plan in place, it can be harder to protect a business, especially if the business was created after you married. However, there are still plenty of solutions.
- Distance – Do as much as possible as early on as possible to distance your spouse from the business.
- Home and Office – Keep the finances for your home and your business separated. Don’t dip into company cash to pay for home expenses, or use home money to pay for business assets, etc.
- Pay Yourself – If your plan was to take a smaller income from the business so that you could use excess to build the business and then sell it as a retirement plan, your spouse will want a piece of that. If you pay yourself really well, and worry less about building the business to sell later, then your spouse has less reason to go after the business.
- Life Insurance – Many life insurance policies with growing cash value can be liquidated in order to buy up your spouse’s share of the business.
- Sacrifice – In order to keep the business, you may have to sacrifice other assets, such as the house, cars, retirement plans, savings accounts or other valuable property.
No matter the situation, the divorce attorneys at Julian, Crowder & Shuster are here to help you come out on the other side of the divorce in the best possible position.