If you are a business owner, you always need to think about protecting your business’ assets. This is especially true if you plan on getting married or already are married. While the divorce rate is in decline in the United States, plenty of couples still end up splitting up. For business owners, a divorce can hurt your company’s bottom line if you need to split your business assets with your spouse.
The most common way to protect your business assets from divorce is a prenuptial agreement. If you and your fiancée both own businesses, getting a prenuptial agreement is highly recommended. Your prenup can address that your business is separate property, not subject to asset division in divorce. Or a prenup could give your spouse a set amount of assets from your business, protecting your business assets’ future growth.
If you already are married, you can opt for a postnuptial agreement. A postnuptial agreement will help protect any assets your business gains during your marriage from a divorce.
A family law attorney can help you create a prenuptial agreement or postnuptial agreement to ensure you won’t need to sell your business if you divorce.
Business owners also must do the following if they want to protect their business assets from a divorce:
- Pay themselves a competitive salary. If you underpay yourself and divorce, your spouse can claim that you should have paid yourself a market-rate income and that impacted your personal finances and your spouse’s financial well-being.
- Avoid using personal expenses to fund the business. If you comingle funds from your personal income for business expenses, that can add more complexity to any divorce settlement and impact how much you come away with in your divorce.
- Think twice about having your spouse involved in the business. Even if your spouse only works for you occasionally for the business, they may be able to ask for a higher percentage of your business assets if you divorce.
Running your own business is a big job, one you likely put a lot of time and effort into. Don’t overlook how important it is to protect your business from a divorce. You wouldn’t want the health of your business to suffer because you weren’t prepared.