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How can a business owner prepare for divorce?

| Apr 21, 2021 | blog, Divorce |

Your business is an important part of your life and a significant financial asset. If you are considering divorce, you may worry about what this major life event means for the future of your company.

As a responsible owner, you invest in insurance and other precautionary measures to protect yourself from unforeseen circumstances. You can also make similar preparations to mitigate the impact of a divorce on your business.

Take preventive steps

A prenuptial or postnuptial agreement can be a useful tool for determining what happens with your business should you separate from your spouse. These agreements simplify what could otherwise be a complex and lengthy process.

You should also take other preventive measures, including separating your professional and personal finances, maintaining detailed financial records and creating a formal operating agreement.

Understand your ownership rights

Many factors can affect your ownership rights. These factors include:

  • The date you formed the business
  • The operational role your spouse held
  • The contributions your spouse made to the organization

Determine your preferred outcome

To achieve the best possible result, you should be clear about the role you want to have after you and your spouse go your separate ways. Your preferred role will determine the steps you need to take next. For example, if you want to maintain ownership of the business, you may need to compensate your spouse for his or her share.

Legal counsel can help you understand what options you have to achieve the desired outcome for your business following a divorce.