Building a successful business takes years of hard work, and your business is most likely your largest financial asset. Therefore, you may be worried that marital asset division during a divorce could impact your business ownership, your income and your ability to keep running your business.
Fortunately, you can avoid the risk of losing everything with some advance planning, such as the creation of a prenuptial or postnuptial agreement.
Using a prenuptial agreement
One of the best ways to protect your business in the event of a divorce is by creating a prenuptial agreement before you marry. This agreement details how numerous financial matters should be handled during a divorce.
That can include how the business should be valued in the event of a divorce and what your spouse would be entitled to receive in the event of a split. It can also make it clear that your spouse cannot obtain ownership rights. Many business partnerships even require prenups for their partners so that everybody’s investment is protected.
Using a postnuptial agreement
Determining ownership rights can be complicated if you start or acquire a business after your marriage, but that doesn’t mean that you can’t carve out exceptions to the usual split of the marital assets through a postnuptial agreement.
Just like a prenup, you can use a postnuptial agreement to specify ownership rights and address how the business should be divided (or not) during a divorce.
A divorce can be emotionally devastating and an overwhelming process. However, it can become more complicated and contentious if you own a business. After working hard to create a successful business, ensure you protect your business by writing a detailed prenuptial or postnuptial agreement.