How to Protect Your Business in a Divorce
Despite your efforts to devote several hours a day in building your empire, you might end up witnessing your enterprise crumbling down to pieces as an aftermath of a divorce. If you have an angry and resentful partner, the chances of losing out on your well-established business becomes even higher. However, if you are well aware of your rights and know how to get them enforced, you can ensure that your spouse does not end up taking a massive bite of what is rightfully yours. Here are a few ways in which you can protect your business from becoming a controversial issue in a divorce lawsuit.
Sign up a premarital agreement
The best way to protect your business from an unwarranted division is to get your spouse to sign a prenuptial agreement that would stipulate the instructions for the evaluation and distribution of your business finances in the event of a divorce. However, if your spouse refuses to agree upon a prenup, you must at least take the assistance of an appraiser to determine the initial value of your business at the beginning of your marriage and make it easier to identify any appreciation or depreciation in due course of time.
Avoid involving your spouse as an employee
Although for several reasons such as tax benefits, most of the business owners end up appointing their spouses as employees in their company, it is advisable to refrain from this habit. The reason is that if you decide to separate from your spouse, he or she might end up making a claim to a portion of your business assets on the pretext that they too have actively contributed towards its growth and profits. However, if you already have your spouse working for your business, you must make it a point to fire them right away and save yourself from undue claims.
Trade off other assets
For the division of property in the event of a divorce, the court adds up the total assets of a couple and carries out an equitable distribution between both the parties. It is always advisable to try and retain complete ownership of your business by paying the buyout price in the form of other marital assets such as your family home, car or retirement accounts.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.