Divorce can create a lot of problems for business owners. If you have put your assets into a business and they are subject to division during divorce proceedings, it could jeopardize everything that you have worked hard to achieve.
There are a few things that business owners can do to proactively protect a company against divorce. Some simple but effective precautionary steps may make it possible for you to preserve your interests, keep your business going, and continue meeting your obligations to partners or creditors.
Create a prenuptial or postnuptial agreement
An agreement stating that the assets you invest in a business are not marital property is an excellent way to safeguard them. If you are already married but do not have a prenuptial agreement, a postnuptial agreement can have the same binding effect.
Amend your organizing documents
Identifying yourself as the sole owner of a business in a company’s articles of organization creates clarity about ownership. You could also explicitly state that you cannot transfer your business in the absence of certain circumstances.
Tighten up your recordkeeping practices
Having good financial records and being able to distinguish business assets from personal assets can be a big help to business owners. Your recordkeeping may play an important role in how a court divides your assets in divorce proceedings.
If you do not plan ahead, you may be vulnerable to losing some or all of your business interests in divorce proceedings. Be sure to take appropriate measures that may help spare you from having to assign away your interests or dissolve your business entirely.