Taking Steps to Ensure That Your Business is “Divorce-Proof”
Parting ways with your spouse does not necessarily mean divorcing your business. In an ideal situation, you and your spouse hopefully agree that it is in both of your best interests to preserve the business so that it continues to provide income.
In a divorce, a privately-held business can be a significant portion of the marital assets. As a result, it may be subject to division in the settlement and, without the proper arrangements, could be liquidated or fragmented.
There are several important steps that you can take to “divorce-proof” your business. Perhaps most importantly, a prenuptial agreement drafted by a family law attorney is a crucial precaution, as it clearly identifies the business as your separate property, rather than as marital property; if you are already married, a postnuptial agreement may do the same. It is also advisable to visibly position the business as your employer, and keep all business-related finances separate from your personal finances. Buy-sell agreements can also be useful in preventing claims on the business by your spouse.
Protecting your business in the event of a divorce falls under the same category of important preventative measures as property insurance and liability insurance. Including a defense against divorce is a wise step in constructing your long-term business plans. If you have any questions or would like to speak with a family law or corporate attorney, please do not hesitate to call HoganWillig at 716-636-7600.