Small Business Owner’s Guide to Divorce

Small Business Owner’s Guide to Divorce

Being a small business owner can be incredibly rewarding. It is fun to watch your ideas flourish and grow and bring in income for you and your family. It can be like a dream come true. However, what was your dream may become a nightmare for you in the event that you and your spouse find that you can no longer live together as a married couple.

More likely than not, your business is the most valuable and important asset in your marriage. In addition, you and your spouse may have invested your retirement accounts or other savings into the business. You may have even had to pledge your personal assets in order to fund a line of credit. Looking back, it would have been a good idea to have signed a prenuptial agreement before your marriage so that each of you could have protected your individual assets from division in a divorce matter, but if you did not do that, what can you do now to try to protect yourself and your business while you are going through a divorce? Here are my 5 tips for protecting your small business

Don’t Wait

If you or your spouse have even mentioned the word divorce, you could be headed in the wrong direction in your marriage. Once the word is mentioned, it is important to begin counseling as a couple as soon as possible in an effort to save your marriage. However, it is also time to start looking at your business and thinking about what your options may be in the event that counseling is unsuccessful.

Consult with both an experienced divorce attorney and an experienced business attorney

Businesses have different organization types or structures such as a C-Corporation, an S-Corporation, a Limited Liability Company, a Limited Liability Partnership, a Sole Proprietorship among other types of business entities; and even within each different type of business entity there are different forms of operating agreement, partnership agreements, Buy-Sell Agreements and the like. Anytime a business is up for potential division in a divorce, the issues are move diverse and complex. As you can see, this makes each case unique and the potential options for resolution unique. That is why it is so important to have an experienced attorney or attorneys who have knowledge of both business and divorce matters. Often as matrimonial lawyers who concentrate our practices solely on family law, we will bring in attorneys equally versed in business law to make sure all aspects of our clients’ cases are managed in the most effective way possible to protect their interests. It is important that you meet with an attorney as soon as possible once you have reason to believe that your marriage may be in trouble in order to determine the best path forward for you.

Post-Nuptial Agreements

If you did not sign a pre-nuptial agreement prior to your marriage, you can still sign a post-nuptial agreement after your marriage as long as you and your spouse agree to do so. A post-nuptial agreement is a contract signed by you and your spouse with each of you having separate legal counsel which outlines what will happen to all assets, property, and income in the event of divorce, separation, or death. If you did not sign a pre-nuptial agreement it is the best option you have to protect your small business in the event of a divorce. Because you are signing this post-marriage and after the likely accumulation of joint assets, it is very important that all assets and debts are disclosed as part of the negotiations for the post-nuptial agreement.

At New Beginnings Family Law, we understand how stressful and devastating a contested or uncontested divorce and child custody issues can be for a family. Our team is committed to providing a caring and comfortable environment where you can feel safe to talk about your case and your goals for the future.

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