When spouses are business partners or co-owners, ending a marriage can terminate business relationships. Preparation before your divorce can help protect your business.
Divorce can impact business if it is part of property division. It may disrupt daily operations and can take you away from your management duties through court appearances, answering calls and dealing with lawyers and other professionals. Demands for business documentation can be distracting and time-consuming.
Likewise, this can sidetrack employees helping you obtain documents for appraisals and who become involved in on-site visits, inventory review tax return analysis and interviews on business operations and expenses.
Employees and partners may face many issues related to property division such as paying out your spouse with stock shares, whether your spouse will sell stock, or if the spouse becomes an uninvited partner in the business. Spouses involved in the business may give up their duties or partners may have to work with spouses who stay involved in the business in a stressful relationship.
The spouse may have to surrender liquidity to buy out a spouse. Or the business may have to be dissolved to pay off another spouse.
A prenuptial or postnuptial agreement may address these matters. Spouses can agree on whether the business is part of property division, whether a spouse will share in the appreciation of depreciation in a business established before marriage and the methodology used to value the property in a divorce. Couples who have an ownership interest can agree on whether a spouse will buy out the other spouse’s interest, whether the business will be sold or if the business partnership will continue.
Management practices are also helpful. Keep detailed records on all business capital sources, segregate business and personal expenses, pay yourself a fair market salary so that a larger income figure is not used for determining support and compensate your spouse with a fair market salary so a larger income figure is not used for their service contribution.
If divorce is forthcoming, keep work and divorce activities files separate. Use different files and computers for business and personal matters.
Carefully schedule time to deal with divorce-related matters. Prepare a single list of needed materials to help employees assisting you.
Ana attorney can protect your business interests. They can also prepare prenuptial or postnuptial agreements to avoid problems.