How to Handle a Divorce With a Business Involved

how to handle a divorce with a business involved divorcing company assets

It's a statistic that you're probably already all too familiar with: about 50% of all marriages end in divorce. We all hear it, and yet, we all hope going in that we end up being on the opposite side of that half-and-half equation. 

Unfortunately, we all can't be that lucky. Divorce is common, tricky, and often painful. Divorce with a business involved is doubly so. It can be hard enough to untangle the ties of two lives even without the complicated nature of a business structure needing to be pieced apart as well.

Your assets and business interests certainly come into risk during a divorce, and it's essential that you understand how this process can affect your work going forward. Read on, and we'll walk you through everything you need to know about divorcing with a business involved. 

Is Your Business Part Of Your Divorce? 

Many people don't know to what extent their business matters may be involved in their divorce. The sad truth is, even if your spouse wasn't directly involved with your business, they might still have a stake and claim to many of your business assets. 

This can come as a shock to many would-be divorcees, especially to those who have built their businesses up over the course of a marriage's lifetime. 

If you're getting divorced currently, it might be too late for you to go back in time and change the establishment of your marriage agreement. But for those who still have the future in front of them, pre-marital agreements can be the key to ensuring a clean divorce later on. 

In these pre-marital agreements, one can spell out their pre-existing business assets and have their to-be spouse waive any future claim to them. This waive will hold even if your business appreciates in value over the years. 

Unfortunately, this kind of arrangement doesn't work if you're already married and in the beginning stages of an ugly divorce. Instead, you'll need to play on the defense and minimize the impact that the divorce proceedings might have on your business. 

Strategies to Protect Your Business

If you want to protect your business from the impact of divorce, there are a few steps you might need to be willing to take. The first is getting yourself on the right footing. 

How involved was your spouse in your business? Take the time to really asses their level of involvement and impact. If you can prove they've had little no involvement with the company, they will have a reduced claim to the business value. 

That means your spouse can't be an employee, nor can they contribute in any way to the management or overall vision of the business. If you can, begin to collect evidence leading up to the divorce about your spouse's lack of involvement. The less connected to the business they are, the better for your own future. 

You'll also want to reconsider your agreements with business partners. It might be worth establishing a corporation or LLC that can restrict ownership transfers for your business.

If you have business partners, you should seriously consider revising partnership agreements and giving other partners to buy out the interests of yourself and your spouse. In this way, you can avoid your newly independent spouse taking control of the company-- which is probably your worst nightmare for the divorce.

You might still have to compensate them handsomely, but at least your company will remain your own. 

Establish Clear Separations

It can also help to carefully establish clear bounds between your business and your personal finances. Assets from the business are easier to untangle if they are not co-mingled with personal assets from the family.

This kind of co-mingling can begin to give your spouse more room to stand on in terms of their stake, even if they themselves are not personally involved in the work of the business. 

Finding the right strategy to protect your business will depend on the specifics of your case. You can always contact an experienced attorney or law office to help build a strategy for your divorce. 

Deciding Upon a Business Value

If your business is going to play into your divorce, then it is important that the business has a quantifiable value placed on it. This number can be difficult to come to. If you and your spouse can come to a number you can agree on, the divorce proceedings will run smoother. 

Unfortunately, if there is some debate over the value of the business, things can get ugly. Often in this situation, couples rely on the accountant at a business to provide a number based on the accounting value of a business. This is often far removed from the true market value of a company. 

Often in these situations, you want to keep the perceived value of the company as low as possible. 

This can mitigate some of the losses you might have to see go off to your spouse during the course of the divorce.

Bringing in experienced help to determine the proper valuation and evidence can be a huge help during divorce proceedings. 

Divorce With a Business Involved

No one likes going through the process of splitting up. But divorce with a business involved can be particularly ugly. The above tips and tricks should help you navigate this tricky process and hopefully come out the other side unscathed. 

Need more help navigating the law as it pertains to your business? Check out our legal page for more information, and if needed also check out our Loan page if you get into financial trouble. 

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