You poured your heart and soul into a new business venture, and just as it is beginning to gain traction, your marriage suffers and your spouse files for divorce. While the marriage may be irretrievably broken, the business certainly is not, and you may not feel like sacrificing the business in a divorce.
With that, some divorcees may want to protect a business. This post will provide a few options for those concerned about losing it.
Refer back to a prenuptial agreement – The purpose of a prenuptial agreement is to organize the distribution of marital (and non-marital) assets upon divorce. Chances are that your prenuptial (or postnuptial) agreement will detail how the business will be identified for asset division purposes.
Track the money – Your soon-to-be ex may claim that marital property (i.e. money) was used to create or fund the business, and that because of this, your ex owns or is entitled to a portion of the business. By tracking the money properly, you may be able to show that the business is supported by non-marital assets.
Make a deal – You may be able to protect the business by offering your interest in other marital assets in exchange. For instance, you may be able to offer your share of investment and retirement funds or real property in exchange for resolving claims against the business.
Of course, there is no one, cookie cutter standard to protect a business in a divorce. Every situation is different. Because of this, sitting down with an experienced family law attorney is the first step in protecting a business during divorce.