How Can I Protect My Business During a Divorce?

If you have no contract, whether it's a prenup, a postnup, or an agreement to buy/sell, you can still take measures to protect the business. Some of these measures include:

  1. Establish yourself as the sole owner of the business. Organizing documents should specify that the business is not transferable in the event of a divorce. To note, you may still need to provide a cash award to the non-titled spouse at the time of divorce.
  2. Keep your records. Even things like office furniture and office rent should not be paid with marital assets and maintaining records to clarify this is important.
  3. Separate finances. You should not mix business and personal expenses, and by not doing so, you can show that the business is separate. The opposite is true if you do commingle funds.
  4. Spouse as an employee. If your spouse worked at all, even if very minor, keep documents proving that the spouse was paid for their services. 

Generally, you want to maintain clear and thorough records of just about everything related to your business. 

Even with any of the safeguards in place, a non-titled spouse may still pose a challenge to your business. They may try to inflate their contributions or obtain an appraisal that overvalues the business. The latter, at a minimum, is why having a divorce lawyer who is resourceful and knowledgeable is key to countering these tactics. 

For all of these measures, however, it is important to have an attorney assist you in the administration of these various issues to ensure that you are in compliance with all of your fiduciary obligations as a spouse.

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