You probably entered your business and your marriage in New Jersey with the best intentions. But as many as half of all marriages fail, and many companies do, too. If you run a successful business and want to protect it from a possible bad marriage, you can take several steps to ensure you don’t lose it after negotiating a divorce settlement.
Steps to divorce-proof your business
Documentation can become your best friend when protecting your business from a possible future divorce. Operating a business as a sole proprietorship is one of the riskiest operational strategies when it comes to divorce, as your spouse may be entitled to as much as half of the business in a settlement. Even if you operate under another business format, consider these steps to protect your company.
• Early documentation, including operating agreements, partnerships or shareholder agreements to include provisions in case of divorce
• Pre-nuptial agreements outlining what is marital property
• Post-nuptial agreements that describe what marital property is if spouses become business partners
• Buy-sell agreements that help small business owners decide who owns the business when a death, disability or divorce occurs
• Trusts, protecting your business from creditors and sometimes spouses
Documenting what is considered marital property, even if no arguments are on the horizon, will ultimately protect your interest, as well as those of your spouse.
Why you need protection for your business
Property division Arguments about what marital property is one of the most contentious issues in divorce cases. Creating documents about your business that spell out what can happen with a business asset in the future can lessen contentiousness and help you agree, especially if your spouse has a hand in running your company. Such agreements can help shorten the time to achieve a final decree if a divorce is inevitable.
Although it may seem counterintuitive to put safeguards in place when your marriage is going well, situations can change quickly, leaving you surprised and upset. Making decisions about your business when not under intense pressure will allow you to make sound decisions without emotions clouding the process.
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