Divorce can be challenging, and when you own a business, the stakes often are higher. Protecting your business during divorce proceedings helps ensure your hard work and investment remain intact.
If you have yet to get married, planning ahead is wise. Prenuptial or postnuptial agreements can stipulate the handling of your business in the event of divorce, providing clarity and protection.
Transparency is important during divorces. Keep thorough records of your business finances, including income statements, tax returns and bank statements. These documents can help establish the true value of your business.
Separate personal and business finances
New York state has about 2.2 divorces per 1,000 people. Many of these divorces involve business owners, and they should avoid commingling personal and business finances. Maintain separate bank accounts and credit cards for your business to demonstrate that your enterprise is distinct from marital assets.
Determine the value of your business
Hiring a qualified business appraiser can pinpoint the accurate value of your business. This valuation can be instrumental in negotiating a fair settlement.
Explore buy-sell agreements
A buy-sell agreement with your business partners can establish a protocol for handling ownership changes, including divorces. Such agreements often include options for buying out a divorcing spouse’s interest.
Maintain good business practices
Continue to operate your business efficiently and profitably during the divorce process. This demonstrates that the enterprise is viable and may be able to support both parties.
Protect intellectual property
Ensure that you protect all intellectual property, patents, trademarks and copyrights associated with your business. These assets can significantly contribute to your company’s overall value.
Consult with a financial advisor
Seek guidance from a financial advisor with expertise in divorce-related financial matters. These professionals can help you make informed decisions about the financial aspects of your divorce.
Strive for a fair and equitable settlement. This may involve trading other assets or providing a share of future business profits in exchange for retaining ownership.
Protecting your business during divorce requires careful planning and attention to detail. Lean on friends, family and mentors for emotional support during this difficult time. They can provide valuable guidance and perspective.