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Tips to protect your business in case of divorce

On Behalf of | Nov 9, 2016 | Divorce

If you own a business and are thinking about divorce, you may be wondering what strategies are best when it comes to protecting your company.

When contemplating your options, seeking the advice of legal counsel would be a step in the right direction. Divorces can be messy and complicated, even more so when one or both spouses owns a business. Professional advice, especially when it comes to valuing your assets in preparation for a division of property, can reduce the stress associated with divorce.

Separate finances

It is important that you keep your family’s finances separate from your business. For example, do not borrow against the house to buy assets for the business or to cover other expenses. Co-mingling the business finances with the family’s can provide additional possession rights to your spouse.

Your spouse as an employee

Having your spouse employed by your business may have seemed like a good idea in the beginning, but if you are headed for divorce it is time to start looking for someone else to fill the position. The more involvement your spouse has in the business, the stronger the case is for your ex to claim rights to the company.

Property division

During the divorce proceedings, as the court is determining who gets the house, keep in mind that your goal is retain 100 percent of your business. You may have to sacrifice other assets acquired during the marriage in order to avoid having the business split between you and your spouse.


During divorce proceedings, your business as well as other assets will be subject to valuation. Typically, the court will appoint a professional to provide the service, however, it is in your best interests to get a second opinion. Arrange for another professional, neutral of all parties concerned, to review the original estimate.

Buying out your ex

If the court divides the business between you and your spouse, you may have the option to buy your ex’s share by making monthly payments.

Preventive measures

Prenuptial and postnuptial agreements can provide preventive measures to protect your assets in case of a divorce. A pre-marital or post-marital agreement that is well-drafted can often circumvent property division laws. These types of agreements provide a very strong tool for protecting not only your business, but other assets as well.

These agreements generally need to be in writing, cannot be considered unconscionable (unfairly weighted toward one party), and must be signed by both parties in front of witness, such as a notary.

It is also recommend that the document be signed by a judge, to ensure that neither party was coerced into the contract.

If you own a business and are considering divorce, it is important to understand your rights and the process of property division. For advice concerning such a matter, contact an experienced divorce attorney.

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