The legal and financial repercussions of divorce can be immense. One of the biggest is what happens to a business. A frightening possibility is an ex-spouse affecting yours.
Even if your marriage is going great, know how to protect your operation in the event of a split. A bit of foreknowledge can yield significant peace of mind.
What can happen to your business
One potential outcome is that you wind up in a corporate partnership with your former life partner. Community property states demand the equitable distribution of assets in a divorce. If you live in one, you might have to share your corporation. Such an arrangement is bound to be uncomfortable.
The alternative might be liquidating the company and splitting the proceeds. Judges are hesitant to order this when the entity in question is paying the bills. That said, it becomes unavoidable in some cases.
Worse, there is the chance of retribution. An acrimonious split might lead to direct sabotage.
How to shield your business
There are several methods by which you can protect your company. One is to state that it will always remain yours as part of a prenuptial agreement. If you are already legally bound, incorporate this stipulation into a postnuptial agreement.
Another measure is to avoid employing your spouse. The more involvement your partner has, the greater the likelihood he or she will want to continue making decisions. Also, keep business and personal expenses separate so they remain divided property.
Finally, put the venture in a trust, thus eliminating it as a marital asset.
Avoid compounding the frustration of divorce. Take action now to keep unwanted hands away from your enterprise.