What can a business owner do to prepare for divorce?

On Behalf of | Mar 23, 2022 | Divorce

Unfortunately, divorce is common among entrepreneurs. They often make sacrifices, such as long hours, to nurture a growing, successful business.

The inevitable division of assets may affect your business. However, you can take measures to protect your investment in the event of divorce.

Do not ignore your own salary

Many business owners sacrifice their own salaries to build the company. As a result, the family income suffers. When divorce occurs, your spouse may request a share of the company because you anticipated a larger future payout from all your hard work.

Keep business and personal financials separate

At some point, every business owner must seek financing to cover business-related expenses. Avoid accessing personal savings accounts to fund the company. Borrow outside of the home where financing options are vastly available, even to risky borrowers.

Be willing to forfeit other assets

You naturally want to maintain full ownership of the business you built. In a divorce, the court divides marital property equitably between the two spouses. To keep your business, you may need to sacrifice other assets. Assets could include valuable jewelry, vehicles, the home, or retirement accounts.

Make payments to buy out your spouse

If your spouse does retain a share of the business and you do not have the cash to buy them out in one lump sum, you can offer to make payments for a gradual buyout. You may use your share of the company cash flow or an appropriate loan.

Ultimately, the avenue you chose to protect your business in a divorce may depend primarily on your willingness to compromise and negotiate.

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