Property division is one of the more contentious aspects of any marital dissolution. In far too many divorce actions, the more valuable the asset, the more likely disputes will arise between soon to be ex-spouses.
Few possessions subject to asset division are more valuable than a business owned by one or both spouses. Significant financial resources, countless hours, and unlimited sweat equity goes in to building an enterprise. Years of tending and nurturing leads to significant growth in value.
No one who is getting married wants to remotely consider the prospect of divorce. Yet, the fifty-fifty statistical chance of your marriage ending should not be discounted. Options exist to protect your business. Those include:
Transferring business assets to an irrevocable trust can be effective. However, taking this step during the marriage could lead to accusations of a fraudulent transfer.
Compensating yourself fairly. Paying yourself a less-than-competitive salary in favor of putting money back into your business can backfire. By not benefitting from the business ownership, your spouse may be entitled to more money or a larger share.
Keeping your business and home lives separate. Hiring your spouse or involving them in operations could entitle them to a larger percentage of ownership or a share of your partnership.
Offering your spouse other marital property equal in value to a portion of your business they are entitled to or negotiating a long-term buyout.
Retaining a divorce lawyer to draft an enforceable prenuptial agreement.
Any type of divorce is not something to do on your own. Starting new chapters in your professional and personal life requires skilled legal representation from an experienced divorce attorney.
Source: Inc., How to Protect Your Business in a Divorce, Jeff Landers, May 25, 2010.