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5 Ways to Divorce-Proof Your Business

5 Ways to Divorce-Proof Your Business

When two people tie the knot and start a life together, it’s easy to forget that it might not last.

That’s one reason some couples don’t sign prenuptial agreements — even if one party enters the marriage with substantially more than the other. In a perfect world, a prenup won’t be needed. Two people will get married, have kids, buy a home, and live happily ever after.

Achieving this idea isn’t impossible. After all, many couples take their wedding vows seriously and get through the ups and downs of life together. But far too many marriages end in divorce.

If you own a successful business, want to get hitched, and don’t want to risk losing everything you worked for in a divorce, consider these five ways to divorce-proof your company.

  1. Speak to a Family Law Attorney

Before walking down the aisle, you should sit down with a family law lawyer`. Spending an hour or two with a lawyer is cheaper than running down the aisle to get married, going through a contentious divorce, and losing control of your small business.

You’ll have the chance to ask questions and get answers that can inform intelligent decision-making. Having a high net worth doesn’t mean you shouldn’t get married. But you should proceed with caution and not blindly chase after love. Take smart steps forward. If marrying, you want to hope for the best while being prepared for the worst.

  1. Separate Personal and Business Expenses

It’s a good idea to keep your business and personal expenses separate. If you don’t do this, you’ll have difficulty proving that your small business isn’t a material asset during divorce proceedings. You’ll have an easier time protecting your business interests if expenses related to your company are separate from your personal expenses.

  1. Set Up Shareholder or Operating Agreements

Another way to safeguard your business interests in the event of a divorce is to set up shareholder pacts — if your business is a corporation — or operating pacts — if your business is a limited liability company. Using such agreements, you can ensure equity from your business isn’t available to your spouse in divorce proceedings. 

A shareholder or operating agreement will permit other equity holders in the company to purchase your stake in the company. You and the other shareholders can make things even easier by determining how much the equity will be worth.

  1. Pay Yourself a Competitive Salary

Yet another strategy to protect your business interests is to pay yourself a competitive salary from the company. Some business owners, in a bid to grow their companies, reinvest profits into the company. While doing so can help scale up business-wise, it can cost you in a divorce.

If your spouse is an employee at your company, ensure they get a competitive salary. Otherwise, they may allege they okayed a lower salary, believing they would gain a stake in the company.

  1. Document Business Capital Source

You should also carefully document the source of capital for your small business. If you get divorced, you’ll want proof of where the money came from. Did you start your company using money you had before getting married? If so, keep good records to prove this if there’s a divorce.

If you are considering marriage, you won’t want to contemplate a nasty divorce down the road. But it’s wise to safeguard your business interests — just in case. Retaining a family law attorney is one of the best decisions you can make before getting married. You can get help ensuring that your business isn’t in play, should your marriage end in divorce. Speaking to a lawyer is a must.


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