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Protecting a Family-Owned Business During Divorce

Posted on in Divorce

Hoffman Estates divorce lawyer, family-owned business, divorce process, postnuptial agreement, divorce and financesWhen a couple ends their marriage in divorce, the process of separating their lives from each other can be a lengthy, difficult process. Determining how to divide physical property, financial assets, and debts can be a complex matter, and when one or both spouses own a business, this process can become even more complicated.

Spouses who are business owners often have many of their mutual financial assets tied up in the business, making it difficult to divide these assets while keeping the business intact. Taking the following measures can help you ensure that your family-owned business will survive your divorce and that you will be able to maintain financial stability:

  • Consider a prenuptial or postnuptial agreement - If you owned a business prior to your marriage, a prenuptial agreement can specify that you will retain ownership in the case of divorce. For a business that was formed after your marriage, a postnuptial agreement can define how ownership will be handled after divorce.

  • One spouse can buy the other spouse’s share of the business - If you want to avoid splitting your business’s assets with your spouse, you can “buy out” his or her share of the business. This could be done through a cash payment or by allowing him or her to retain a larger share of other marital assets, including physical possessions, equity in the marital home, or investment accounts.

  • Both spouses can continue working together as business partners - If it is not possible to divide assets in a way that allows one spouse to retain ownership of a business, and if you are able to cooperate with your spouse, the two of you may be able to continue co-owning the business and managing it together after your divorce. However, you should make sure that your divorce agreement allows one of you to buy the other’s share of the business in the future.

  • Pay yourself a competitive salary - In order to protect your finances after divorce, it is important to have a steady income. If you choose to pay yourself a lower salary so you can reinvest profits into your business, your spouse may be able to claim ownership of those business assets in the divorce. Make sure that you are paying yourself enough to maintain a comfortable lifestyle after your divorce.

Contact a Schaumburg Divorce Attorney

The skilled attorneys of Anderson & Associates, P.C. are experienced in business valuation during divorce, and we can advise you of the steps you should take to protect yourself financially and keep your business intact after the end of your marriage. Contact a Hoffman Estates divorce lawyer today at 847-995-9999 today to schedule a free consultation.

Sources:

https://www.inc.com/guides/2010/05/protecting-your-business-from-divorce.html

https://www.business.com/articles/the-business-of-breaking-up-how-to-protect-your-company-in-a-divorce/

http://www.marketwatch.com/story/how-to-protect-your-family-business-during-a-divorce-2017-02-10

https://www.entrepreneur.com/article/220124

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