Nobody enters a marriage thinking about the possibility of separation. But still, about 50% of marriages in the U.S. end in divorce.
When your marriage is no longer happy or healthy, you may see a divorce in your future. This difficult realization can bring many concerns to mind. As a business owner, one of your biggest concerns may be protecting your business.
Luckily, there are several ways to protect your business before a separation. Here are some key tips to follow if you see a divorce in your future:
- Limit your spouse’s involvement. The more your spouse is involved in your business, the more likely a lawyer is to argue that your spouse played an important role in growing the business – and therefore, should profit from it. Whether your spouse is an employee or contributes to your business’s oversight, it’s best to ease them out of their role as soon as possible.
- Review your options. You should look into your options for establishing a buy-sell agreement, corporation or limited liability company. You could also explore the possibility of creating a living trust to restrict ownership and ownership transfer.
- Keep your accounts and assets separate. You should not use your personal accounts to fund business needs. For example, you shouldn’t dig into your house fund to purchase company vehicles. This is an important way of ensuring that the value of your business is accurate.
- Pay yourself a fair salary. You should pay yourself a market-rate salary. If you were underpaying yourself in hopes of eventually selling the business and enjoying the proceeds with your spouse, you should stop that immediately.
Divorce can be messy, and fighting over your business can make it more stressful. If you think a divorce may be in your future, these steps can help you prepare.