It’s a situation that can happen to even the very best of entrepreneurs – when you’re putting in long hours and focusing all your energy on building a successful business, a marriage can break down and the next thing you know, your spouse is filing for a divorce. It’s a common scenario with 40-50% of all marriages in the USA today ending in divorce according to a report carried out in 2010 at the University of Virginia. And when it comes to second marriages, the divorce rate is even higher. If you are a business owner and believe that your marriage could be in trouble, here are a few steps to take in order to make sure that your business is protected during the process.
- Hire a Good Lawyer
First and foremost, you will need to hire a good divorce lawyer such as Charleston Law. You will need to make sure that you have an attorney who is well versed in divorce cases where one or both spouses are business owners, and therefore able to provide you with sound advice on the next best steps to take in the process when it comes to protecting your company as much as possible.
- Maintain Good Records
Maintain accurate business records and make sure that your personal and business finances are kept separate. If you are using the proceeds from your business to pay for household bills and other expenses, then the best way to do this is to pay yourself a salary which you can use for this purpose. Don’t allow personal and business finances to overlap, such as remortgaging the house to finance the business.
- Fire Your Spouse
If your spouse is actively working for your business or contributing in some other way, then this could be used against you in the event of a divorce. So, the best thing to do in this situation is to prevent your spouse from working for the business any longer. The more prominent their role, and the longer he or she has worked in the business, the stronger the case for them helping to build the enterprise, and therefore they will be entitled to profit from its growth in the event of a divorce.
- Sacrifice Other Assets
In order to protect your business at all costs in the event of a divorce, you will usually need to be prepared to sacrifice other assets. In a divorce settlement, the couples’ assets will be added up and then divided between the two, therefore you may be able to retain 100% ownership of the business by allowing your ex-spouse to have a larger portion of other assets such as property or joint retirement accounts.
- Place the Business in a Trust
If you’re out of options, then placing the business in a trust could help protect its growth value. This is because you will no longer be classed as the owner, therefore it will no longer be listed as a marital asset.
Finally, it’s worth considering an insurance policy that is able to provide the funds for you to buy out your ex’s share of the business in the event that they gain ownership to part of it in a divorce.
