Your Small Business in a Divorce
When you own a small business and you believe your marriage is ending, it is important to ensure that you have a strategy in place to protect your business. Depending upon where you live, your business can be considered marital property and subject to division in a divorce. Thus, it is imperative that you take action to help ensure you keep your company in the event of divorce.
It is important to understand that the most effective tools for protecting your business should be taken well in advance of filing for divorce. In fact, signing a prenuptial agreement that is signed before you get married can provide significant protections. If you did not obtain a prenuptial agreement, you may still want to consider getting a post-nuptial agreement in case a divorce is in your future. It is important to confer with an experienced family law attorney regarding this matter and whether the timing of this type of agreement is sufficient to protect you.
Your business entity should have certain protective contracts in place. By having shareholder agreements, buy-sell agreements and employment agreements, an entity can be protected by preventing the transfer of ownership in a divorce. Your entity agreements can provide that no owner, partner or shareholder can transfer ownership without meeting certain criteria. You may even consider having spouses of owners execute waivers of future interests of the business.
As the owner of a business, it is essential to pay yourself a competitive salary. Many owners do not do this and opt to reinvest everything back into the company. Taking this approach opens the door for your spouse to claim that she is entitled to more money in the divorce because she did not receive the benefit from the business that she should’ve been entitled to.
Finally, try to keep your spouse out of your business. Do not comingle business finances with personal finances. If your spouse attempts to gain a portion of the business in your divorce, be prepared to sacrifice other assets in order to maintain your ownership of the company.
If you own a small business and you want to protect it in the event of a divorce, we can help. Contact the knowledgeable attorneys at the Men’s Divorce Law Firm. Our office is located in Orlando, Florida, but we proudly serve husbands and fathers across the State. The firm also serves men out of state with child custody interests in Florida.