Today, an average of one in two marriages is ending in divorce. Thus, the distribution of assets during a split is becoming more challenging and stressful. Once a business is involved, the process gets even more complicated. Whether you are a shareholder, a board member or a CEO, there are procedures you can take to ensure that your marriage does not interrupt what you earn from these organizations.
It’s smart to protect your business before marriage. Additionally, you can make some savvy decisions along the journey. Having a prenuptial or a postnuptial agreement will define what happens to your company in case of a divorce. You should consider whether the company should be part of joint marital property. Other things to consider are the value of the business during the divorce and any appreciation of assets.
Professionals recommend that you don’t use your home as collateral for your business. Always ensure that these assets are separate to prevent future confusion. Moreover, most business owners pay themselves a lower salary to maintain the liquidity of the business. In the event of a divorce, you are at a disadvantage since most money is left for distribution. Having a high salary reduces the available amount.
Putting the business into a trust ensures that you do not own the company. However, there are laws against the fraudulent transfer of assets. If you’re aware of a looming divorce and transfer the business, your state may consider the transfer null.
Not everyone has an enduring marriage, and once a divorce happens, your business could be divided in the settlement. To protect yourself and the business, you may want to contact an attorney and learn about your options.