If you’re a small business owner facing divorce, then you have some very serious decisions to make, and very little time to decide your path forward. Without proper legal guidance and decisive action, your divorce may take your business down with it. The good news is that you have options — but you must act quickly if you hope to keep your business intact throughout your divorce.
Depending on the specifics of your divorce and when you obtained or founded the business, your spouse may have a legitimate legal right to some of your stake in ownership, just as he or she has a legal right to other marital property. In the absence of a prenuptial agreement that protects your business or some other protection that keep the business separate from your marital property, you must take very careful action in the next season.
First, consider consulting with an experienced attorney to evaluate the specifics of your situation. Each scenario is different, and may entail a particular legal strategy to protect your business and your rights.
In broad strokes, you must make sure that your business and your personal life are as separate as possible, both financially and practically. If your spouse works in the business, you must fire him or her immediately. Avoid any mixing of business and personal assets, especially borrowing money from one to help the other.
You may find it useful to have your business professionally valued. With a professional valuation, it is far more difficult for your spouse to claim that your business, and therefore his or her share, is worth more than it actually is.
Finally, you may have to make sacrifices in other areas to keep the business intact throughout the divorce process. This may mean offering your spouse other assets in the divorce settlement to keep the business off the table.
Don’t hesitate to seek out proper legal counsel to ensure that your rights as a business owner remain secure throughout this difficult season as you prepare to rebuild with a fresh start.
Source: Entrepreneur, “How to Divorce-Proof Your Company,” Carol Tice, accessed June 16, 2017