When two people get divorced, the division of assets can be a complicated and contentious process. Research shows that one of the most common areas of disagreement is over the division of business assets. In some cases, one spouse may try to claim ownership of the other spouse’s business. This situation can lead to disputes and costly legal battles.
You must take some precautions to protect your business from being claimed by your ex-spouse in a divorce. Here are some tips:
Enforce your prenuptial agreement.
A prenup agreement is a document that gets created before marriage. This agreement outlines how assets will get divided in the event of a divorce or separation. If you have made this agreement before getting married, you must enforce it in court.
The presence of a prenuptial agreement allows you to keep your business separate from your spouse’s other assets. That means your business will not be a part of the division of assets during a divorce. Many couples going through a divorce tend to forget about this agreement. As a result, they do not use it to protect their business assets.
On the other hand, some couples did not sign a prenuptial agreement before getting married. In this case, you can still take further steps to protect your business in the event of a divorce.
Gather records of your business and personal finances.
When a couple runs a business, they often combine their finances which can lead to confusion and conflict when it comes time to divide assets in a divorce. The best way to resolve this issue is by gathering all business and personal financial records. Doing so will help identify which assets are separate and joint.
Having proper documentation of your business and personal finances can also help you prove that your spouse has no ownership rights to the company. These records can be helpful as evidence in court to support your claim.
So, create a business budget and track all income and expenses. As much as you can, backtrack and document everything related to the business from the beginning. It will give you a strong case if your spouse tries to claim ownership of the company in a divorce. Doing so will make it easier to untangle your finances in the event of a divorce.
Transfer assets to a third party.
Although it can be risky, transferring assets to a third party can help protect your business in a divorce. Doing this can make it more difficult for your spouse to claim these assets.
Business owners worried about their spouses trying to claim ownership of the company often use this strategy. When done correctly, it can be an effective way to safeguard your business from being divided in a divorce.
However, keep in mind that some concerns are associated with this strategy. For instance, if the transfer is not done correctly, it could be considered fraudulent. As a result, you could face legal penalties. Therefore, it’s essential to consult with an experienced accountant before taking this step.
Get a divorce lawyer.
If you are worried about your spouse trying to claim ownership of your business in a divorce, it’s best to consult with a lawyer. An experienced family law attorney can help you understand your rights and options. They can also represent you in court if necessary.
Don’t try to handle the situation on your own. Even though the court may allow you to represent yourself, it’s not advisable. Divorce is complex, and one wrong move could cost you dearly. So, it’s best to have a lawyer by your side who can guide you through the process and help you protect your business interests.
Besides, a lawyer can help you negotiate a fair settlement with your spouse. It is often the best way to resolve conflict and avoid court.
Talk to your ex-spouse.
The easiest way to protect your business in a divorce is to talk to your ex-spouse about it. If you agree on who will get what, you can avoid costly and time-consuming legal battles.
So, don’t be afraid to sit down and have a meaningful conversation with your ex-spouse. You may even be surprised at how amenable they are to work out a fair agreement.
The above are some things you can do to protect your business from being divided in a divorce. If you are going through a divorce or are considering one, keep these tips in mind. And, if you have any questions, be sure to consult with a professional. This way, you can safeguard your business and protect your interests.
