Protecting Business Assets in a Divorce
Business owners, like other high net worth individuals, have a lot to lose in the event of a divorce, including the future of their business and all related assets if not properly managed. The best way to protect business assets in a divorce is to plan ahead of time. While no one wants to walk down the aisle with their future divorce in mind, failure to make appropriate plans for your business can lead to loss of ownership and assets down the road.
Why Plan Ahead to Protect Business Assets?
For affluent individuals entering into a marriage, it is imperative to protect the assets earned or obtained prior to the marriage. The same is true for business owners. It might sound odd to consider personal life events in the management of a business, but marriage and divorce can have a significant impact on a business, especially without a proper plan in place that outlines ownership and assets. Moreover, the proper management of the business once the owner is married is also crucial. Ownership of a business can belong to one spouse prior to marriage, but the business can easily and unintentionally become marital property if business finances are not properly managed and kept separate from personal finances. Additionally, lack of an agreement, such as a prenuptial agreement, clearly outlining ownership of a business prior to marriage puts the business at risk in the event of a divorce.
A premarital agreement is a viable way to protect your business in the event of a divorce, but this agreement must be completed prior to the wedding day. Business owners who are already married can file a postnuptial agreement to protect their business assets, but getting the other spouse to agree to terms once the marriage has already begun might create animosity. While a postnuptial agreement can be filed any time during the marriage and prior to a divorce, introducing this option on the cusp of a divorce will likely yield an unfavorable result.
Planning ahead for your business does not mean you are planning for your marriage to fail. Rather, you are taking important steps to make sure that unexpected events in your personal life do not negatively impact your business. The experienced attorneys at The Troum Law Firm, P.A. can help you protect your business assets today from unforeseen events in the future. Contact us to schedule your confidential consultation.