A divorce impacts both people involved in every possible way. In addition to going through emotional turmoil, both parties will also need to account for all marital assets and prepare for property division. This includes real property, works of art, savings accounts, retirement accounts and business interests.
This can be particularly difficult for business owners. Business owners could see their entire professional empire destroyed by a divorce. In some cases, courts will consider the business a marital asset. Even those who began the business prior to the marriage could see any growth that occurred during the marital relationship deemed martial property subject to division.
Unfortunately, this is not uncommon. A recent publication in Forbes shares stories of business owners losing their ownership through divorce.
Protect your business: Two legal tools that can help
Business owners can mitigate the risk of the divorce having a negative impact on the business with these proactive steps:
- Prenuptial or postnuptial agreement. An attorney can tailor a prenuptial agreement to specifically remove business assets from marital assets. Even those who fail to put together a prenuptial agreement prior to the marriage could execute a postnuptial agreement during the marriage to protect this asset.
- Trusts. A trust is a legal entity that would own the business. It is important to craft these legal structures wisely. A failure to use proper wording to address your specific situation and needs could result in the creation of a legal structure that does not meet your wishes.
Whether drafting a prenuptial, postnuptial or trust instrument, it is wise to seek legal counsel. An attorney experienced in these matters can draft these legal documents to meet your needs and better ensure your business is protected.