Most entrepreneurs work very hard to ensure that their businesses succeed. Owning a business makes one feel independent and ready to face the world due to the financial stability that comes with it. While marriage is a good thing for everyone who gets into it, it can be very messy when divorce comes knocking on the way. Divorce can come to anyone regardless of how successful you are in other aspects of life, including being a successful entrepreneur. When it comes, it can drain you emotionally, physically, and also financially.
Unfortunately, entrepreneurs are more prone to divorce due to various work-related factors. It can be very challenging to decide who gets what when divorce comes, and as a business owner, it is good to protect your business to avoid losing the marriage and the business as well. That said, here are some tips on how to protect your home business during divorce.
1. Include a Prenup
A prenup is never considered as a good thing to many because it’s viewed as a mistrust on your partner or you do not have confidence in your relationship. However, if you want to protect your business among other properties, you may have accumulated before marriage, include a prenup and add your business in it. Work with an experienced Tampa divorce lawyer to ensure you draft a good prenup and execute it amicably with your spouse. Divorce is unpredictable, and while no one wants to experience this permanent separation, it is good not to incur double losses. Everyone will know beforehand what they are entitled to, and that’s why many divorce attorneys advise people to include a prenup in their marriages. It doesn’t mean that you will have to divorce, but at least it will help your divorce to be less messy when it comes to the division of property.
2. Separate Your Business and Family Properties
Once you get married after establishing a successful business, it is good that you separate your business operations from family properties. Most divorce courts will rule any property you have acquired after marriage as community property and therefore should be shared between you two if you are divorcing. Therefore, if you want to prevent your business from this division, keep it separate throughout the marriage. This way, you will be able to prove that the business was owned by you alone before marriage even if you have been using the income from it to support the family. However, a divorce court will not leave your spouse empty-handed in regard to that business, but at least will apply the ‘just and right’ principle by considering the person who owned it before marriage.
3. Avoid Working with Your Spouse
If you are working with your spouse in your business either as an employee or partner, then the divorce court may consider it a marital property during a divorce even if you started before marriage alone. Your spouse will earn some entitlement into the business to some extent. Therefore, if it is possible, do not let your spouse get involved in day-to-day operations of the business. Also, pay yourself a good salary as the owner of the business so that even if you come to the point of dividing property, you will have more to yourself.
4. Be Willing to Let Go of Some Assets
This is not always the best idea, but when no other idea seems to work well in protecting your business, consider giving up some assets, and save the business. This may include giving up your home, some stocks, cash or even retirement funds as long as it means you will remain with the business. Before deciding on this, however, seek informed advice from a Tampa divorce lawyer to ensure you do not make a mistake that you cannot correct later once the divorce is finalized. Some divorce attorneys may advise you to promise long-term payments to the spouse rather than giving them a share of your business. The payments you promise will have to be equal to the value of the business share they were to get.
No one gets into marriage with a plan of leaving it later, but the fact is that it can happen. Rather than waiting for it to happen and lose a business that you worked so hard to build, use these tips to protect it.
