If you know you are about to get divorced, you might be concerned about what will happen to your business. Your soon-to-be-ex-spouse may try to get part of your business during the property division process. How can you protect your company from being a casualty in your divorce?
There are a few things you can do to protect your business from your divorce. Below are three tips you can follow before and during divorce to keep your business assets intact.
1. Sign a postnuptial agreement
If you have not already begun the divorce process, you can safeguard your business assets through a postnuptial agreement. This works the same as a prenuptial agreement in that it allows both spouses to determine what assets belong to whom during divorce. In a postnuptial agreement, you can specify that your business will remain your separate property. According to Business Insider, this is the best way to protect your company from the effects of divorce.
2. Get a valuation
Sometimes a postnuptial agreement is not plausible. If this is the case, it is crucial to get a business valuation if you are getting divorced. A forensic CPA should appraise your business interests to determine its exact value. Valuing the business usually includes determining business assets, debts and income. A fair assessment of the value of your business is key to protecting assets once your marriage ends.
3. Give your spouse other assets
If your spouse is still trying to get a fair share of your business assets, you can offer him or her other assets instead. It is likely your spouse is only interested in the financial value of your business. Therefore, you could consider making up the value with other assets, such as material items, stocks or the family home.
Understanding how divorce can affect your business and making some preparations can make sure your business is not harmed by your divorce.