For most people with a small business they've built up over the years, sharing their business with their ex-spouse after a divorce is not ideal. While it's technically possible to co-operate a business with an ex, it's hard to get the balance right and many businesses don't survive this situation.
So, how can you help ensure that your ex doesn't end up with half your business? Here are four things you can do to save it.
1. Understand Marital Assets. Don't automatically assume that the business you own and run would be eligible for property division in the divorce. But don't assume it's protected just because only your name is on it. Marital assets and community property are defined on an item-by-item basis based on how the income was created and spent. Learning how this will actually affect the business helps you figure out what you must do to protect it.
2. Sacrifice Other Assets. The most likely scenario for protecting marital assets from being turned over to your spouse is to find a way to buy out their share. This can be done in a variety of ways, but one method that doesn't result in additional debt for the business owner is to compensate their spouse from other marital assets. These assets could include your share of equity in the family home or retirement funds.
3. Prepare a Note. A property settlement note is a financial instrument that acknowledges you owe a debt to your former spouse that you will pay at some specified point in the future. This method of buying out your spouse helps those who can't come up with the cash to buy the business right now but expect to be able to do so through future income. It will be a bit more expensive, though, because it includes loan interest.
4. Sign a Postnuptial Agreement. If you're not currently thinking of divorce, you still have time to protect the business in advance through a postnuptial agreement. Just like a prenuptial agreement, this agreement hashes out who would get what in possible event of a divorce. It may be all-inclusive or it could be limited to discussing what happens to the business.
No matter what your current marital or divorce plans, there's still time to plan how you will protect the business you created. Whichever method will work the best for your situation, the best place to begin is to consult with an experienced divorce attorney in your state. Make an appointment today to get started saving your precious business from whatever life throws at you.
When you are faced with a serious legal matter, it only makes sense to work with an attorney who has the skillset to help. Attorneys are specially trained to manage everything from courtroom appearances to issues with paperwork, which is why you should have one on hand for when you are faced with an emergency. The purpose of this blog is to make it easier to understand when you should call a lawyer and how they can help. Read more on this blog to sort out everything you need to know to improve your legal prowess every single day, preventing problems.