Owning your own business comes with a range of advantages, from being your own boss and having full creative control to pursuing a career that you are passionate about with the freedom to hire like-minded employees. If you own your own business, you know that it can be all-consuming, and the success or failure of the business falls squarely on your shoulders. This can cause strain in a marriage, and if the negative aspects of owning a business outweigh the positive, some couples cannot work through the challenges that come with being a business owner. If you and your spouse are considering a divorce, and you have questions or concerns about how the divorce will impact your business, contact a highly skilled divorce lawyer as soon as possible.
Could I Lose My Business in the Divorce?
If you formed your business while you were married, it might be considered marital property, even if your spouse is not a partial owner. The following are examples of additional factors that will determine whether the business is considered marital property:
- When the business was established
- The success of your business before and after your marriage
- Your spouse’s role in the formation of the business
- Your spouse’s involvement in the daily operations of the business and the financial growth
- Whether the value of the business changed
How Could My Divorce Compromise My Business?
If you are aware of some of the potential ways that a divorce can negatively impact a business, you can take proactive steps to avoid them and protect your business. The following are examples of some of the ways that divorce can compromise your business:
- Court appearances, correspondences with your divorce lawyer, and complying to requests for documentation about your company can disrupt your day and distract you from the daily operations of the business.
- If your interest in the business is subject to division in the divorce, this could impact your partners and employees.
- You may be forced to sell or close the business if your spouse is entitled to a significant cash payout in the divorce, or if negative events related to your divorce damages your reputation and discourages people from conducting business with you.
What Steps Can I Take to Protect My Business?
While no one enters a marriage assuming that they will eventually divorce, the reality is that approximately 50 percent of marriages end in divorce. Therefore, if you own a business, it is highly recommended that you take the following proactive steps to ensure that your business is protected in the event of any unforeseen circumstances like a divorce:
- Consider a marital agreement. Pre- and post-nuptial agreements ensure that your business is kept separate from your marriage and may protect your business in the event of a divorce. The agreements must be in writing and signed by you and your spouse in the presence of a notary for it to be legally binding.
- Get a buy-sell agreement. This document specifies when the business owners can sell their interest, who can buy their interest, and the price paid. This is essentially another type of prenuptial agreement.
- Get a shareholder agreement. This document can assign business ownership with a divorce, determine the mechanisms for valuing your and your spouse’s interest in the company, restrict ownership transfer and define other guidelines in the event of a divorce.
- Determine how you want to structure your business. By structuring your business as a partnership or limited liability company (LLC), you can protect your business should you and your spouse divorce.
- Avoid having your spouse work for you. While it may seem like a good idea to work together, this is generally not recommended.
- Establish a trust. By setting up the business in a trust, it will not count as a marital asset.
Whitehouse Divorce Lawyers at Martin & Tune, Attorneys at Law Protect Clients’ Business Interests During a Divorce
If you own your own business, and you and your spouse are getting a divorce, you are urged to contact the Whitehouse divorce lawyers at Martin & Tune, Attorneys at Law. We will recommend the best legal course of action to maintain a successful business and reach a fair settlement outcome. To schedule an initial consultation, call us today at 908-534-9091 or contact us online. We serve clients in Whitehouse, Tewksbury, and throughout Hunterdon County and Monmouth County.