A divorce affects every aspect of your life: social, emotional, and physical. Divorce can even disturb your business. Your small business is one of your most important assets. Know how to protect it.

Here’s a common scenario: you marry your spouse when your business is worth $100,000. You file for divorce 20 years later. Your business is worth $10 million now. The business is your own, but your ex-spouse has some stake in it. It may be too late for the prenuptial, but you can still take steps to protect your business from divorce.

Keep All Finances Separate

Keeping your family and business bookkeeping separate is more than just good business sense. It could also help save your enterprise.

Pay Yourself Well

Give yourself a good salary to keep your family afloat. Funneling all of the money into retirement may seem like a good idea, but remember that your soon-to-be ex-spouse might have a claim to it in a divorce. Funnel all of your extra cash back into the business, and your spouse may have a better legal argument for keeping a stake in it.

Ease Your Spouse Out of the Business

It may seem cruel to fire your spouse. It makes good business sense if you’re headed for a breakup. Soon-to-be ex-spouses have more of a stake in a company when they’re involved for longer periods of time.

Divide business assets cautiously. Sacrifice homes, vehicles, and other things to maintain 100% ownership of your business.

Put Your Business in a Trust

A business in a trust is no longer considered an asset. If you don’t personally own it, it won’t be subject to property division. Talk to a business lawyer to see whether this is an appropriate move for you.

Take Preventive Measures

We can’t always predict the future. If you’re getting married, consider taking preventive measures to protect your business, such as signing a prenuptial. You could sign an early postnuptial in the alternative. Judges can view postnuptials skeptically, depending on circumstances. Consider a buy-sell agreement if you’re uncomfortable with prenuptials or postnuptials. A buy-sell agreement details what will happen to a company in the event of a divorce.

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Photo of Jason C. Brown Jason C. Brown

Jason C. Brown has represented a wide variety of family law clients over the last 20 years, including teachers, homemakers, union construction workers, doctors, truck drivers, accountants, business owners, engineers, lawyers, mortgage brokers and Fortune 500 executives. Many of his cases have involved…

Jason C. Brown has represented a wide variety of family law clients over the last 20 years, including teachers, homemakers, union construction workers, doctors, truck drivers, accountants, business owners, engineers, lawyers, mortgage brokers and Fortune 500 executives. Many of his cases have involved complex custody disputes, alimony claims, and high net worth individuals, including several divorces in which the value of the marital estate exceeded ten million dollars. Every client, no matter their background, is important to Jason.

Jason routinely provides mediation services for family court litigants. He was a longtime board member and corporate secretary for Northgate Church in Ramsey. Early in his career, Jason served as law clerk to the Honorable Timothy R. Bloomquist, retired Chief Judge of Minnesota’s Tenth Judicial District.