How to Protect Your Business in a Divorce
When it comes to your business, you don’t want all of your work to be for nothing. If you’re divorced, you’re probably wondering how to protect your business. You have worked hard to get to where you are and a divorce could ruin everything you have done. A divorce can result in several unfavorable situations, including the fact that your spouse becomes a partner or half-owner of your business, that he has to sell the business to pay your divorce costs, or even worse, that your ex obtains the full of the company. There are many things that can go wrong. Therefore, it is always wise to put measures in place before your marriage begins to collapse.
In this article, we will discuss everything you need to know about how to protect your business.
1. Before you get married, sign a marriage contract.
According to Onlinedivorce.com, signing a marriage contract is the best way to protect any future business you may have. Often people get married too young and do not sign a prenuptial agreement. This is a big problem because some spouses end up creating million dollar businesses during the marriage and could end up losing all or half of them in a messy divorce. A prenuptial agreement is signed before your wedding. It shows what will happen to your assets in the event of a divorce, including property rights and rights to any future or current business. It is important that your marriage contract is managed by a lawyer. The document is written and signed before the day of your wedding. There are important things that must happen when signing a marriage contract.
Both partners must be present when signing the marriage contract. Both parties need to think logically and think about their future, in case something goes wrong. No one wants to think about divorce before marriage, but it is wise to do so because it can save a lot of future hassles and legal battles.
The prenuptial agreement must be signed before witnesses or a notary.
Remember to be honest and completely open about your current assets. This will save you from losing legal battles later. Hiding assets on legal documents doesn’t get you anywhere. This could make your marriage contract invalid and could even result in a fine from a judge later.
If you start a business after your wedding day, it will likely be considered a marital asset. You must state in your marriage contract that any business formed after the day of your marriage will be separate from your matrimonial property. You can even decide how your marital property will be divided.
So the best way to protect your business during a divorce is to have a prenuptial agreement in place. But unfortunately, many couples do not sign a marriage contract before getting married. In fact, statistics show that less than 5% of Americans sign a marriage contract before marriage. If this is the case for you, you can still sign a post-nuptial agreement.
2. Get a post-nuptial agreement.
Yes, there is a post-nuptial contract. It is an agreement that you sign after your wedding day. The only problem is that many judges do not see this as well as a marriage contract. If you decide to get a post-nuptial agreement, you will need to do it soon after your marriage, or several years before your divorce, for it to last. Again, you would like to separate your business from matrimonial property in order to protect it. You will also need to disclose all of the same information that you would need in a marriage contract. A lawyer should be present to make sure that both parties are happy and that there are no unpleasant loopholes.
3. You and your ex can agree.
Another option is whether you and your ex can reach an amicable agreement. For example, you could agree to manage the business with a strict contract in place, or one partner could buy the other. It doesn’t always work, but it’s an option for couples who end up on good terms.
4. Make yourself the sole owner of the business, create a trust or use buy-sell agreements.
By becoming the sole owner of your business, you can stipulate in a contract that in no case will your business be transferred or divided to your spouse during a divorce. You can add that a cash reward will be offered to the untitled spouse.
Another option is to place your business in a trust, a partnership or to enter into purchase and sale agreements. By doing so, you will protect your business during a divorce.
It is very important not to make your spouse a partner in your business. During a divorce, your ex could use it to their advantage, even if he had no contribution in your business. They could lie and say that because they are directors of the business, they are entitled to your profits. Remember to always write everything down on paper and have a lawyer check the documents.
5. Do you pay a competitive salary
By paying you a salary linked to the market, your spouse will not be able to say that the extra money belongs to him. For example, if the current rate for your position is $ 100,000 but you pay yourself $ 60,000, your ex may say that the full amount should be paid to you, so you can support them during and after the divorce.
6. Repay your spouse
If your spouse owns shares in your business, you can still buy back their share of the business. This will then make the business to you. You can pay the full amount in advance for their share, pay them back over time, or even give up another of your assets in exchange for their shares in the business. For example, your ex may have the house and you keep the business.
7. Minimize your spouse’s involvement
From the start of your business, don’t let your spouse get involved in your business unless you really want to. The more your spouse is involved in your business, the more he will have a solid legal basis for your business.
If you are about to divorce and have a thriving business, always consult a lawyer to seek legal aid. They will be able to advise you at best. They will help you understand how to protect your business and how you can grow your business for years to come.