Divorce is never easy, but it’s more complicated when you’re a business owner. This critical divorce advice will help you protect yourself and your business.
Divorce is never is a simple process, and it affects people of all ages.
It’s rare for divorces to be simple affairs. Aside from the emotions involved, the splitting of property and assets can cause a lot of problems.
If you’re a business owner, you may have some questions and concerns about the future of your business. Don’t worry, we’re here to give you the divorce advice you need to protect your business.
Divorce Advice For Business Owners
Protecting your assets should be your first priority in your divorce.
We can’t stress the importance of finding a great lawyer enough for this process. Don’t just get a lawyer that handles divorce cases, look for one that has ample experience with couples that have business assets.
A lawyer can help represent you in court, but you should still listen to good divorce advice so you can know what to expect.
If you want to protect your business assets, make sure you follow these tips.
Gather Your Documents
One of the best divorce advice tips you’ll ever get is to gather any and all paperwork that’s relevant to your business.
Gather information about the business license, previous tax documents, business transactions, and anything that proves your involvement with the company.
Legally binding documents and paperwork are always best, but other kinds of written communication can be helpful.
Take time to print out emails about work matters. Text messages about business can also help strengthen your case.
If you don’t have certain things on hand, don’t panic. You can contact banks, lenders, and government offices for official copies of important documents.
The Texas Divorce Lawyer has great advice on gathering the right information, and about the legal side of the divorce process.
Think About A Trade
If you’re concerned about your spouse gaining control of your business, you may want to consider offering them a trade.
You may have other marital assets you can trade in exchange for full ownership of your business.
Keep in mind that what you trade needs to be close in value to the value of your business. You shouldn’t expect a car or furniture to be a fair trade for a company or business.
Houses are one of the most commonly traded marital assets for spouses that want to protect their business. You may choose to let them have the family home, or have other property you jointly own.
You could choose to sell the jointly-owned property on your own, and give your partner the profits.
Know The Law
If you want practical divorce advice, start learning about divorce law on your own. You can start your research by learning if you live in a community property state.
If you live in a community property state, that means there’s a 50-50 split of all marital assets. That includes all of the assets acquired by each spouse during the marriage.
The law also states that assets you had before the marriage aren’t included in a community property split unless you’ve “comingled” or mixed them with marital assets.
If you don’t live in a community property state, you may live in an equitable distribution state. If you live in an equitable distribution state, the ultimate goal is to split assets as fairly as possible.
Each spouse is may be entitled to a fair share of the marriage assets, but a fair share of that doesn’t always mean “half”.
When judges determine what’s fair, a lot of things are taken into consideration. The length of the marriage and each spouse’s contribution to the business would be important.
Consider Your Options
You don’t have to split ownership with your spouse if you don’t think it will work for you. You can advocate for different options that ensure that both parties can benefit from the business after your divorce.
Instead of trying to co-run a business, you could suggest that you sell the business and split the profits accordingly. This solution could be ideal for you if you’d like to get a fresh start somewhere else.
It’s also possible for one spouse to keep the business, and for the other to receive financial compensation for it. This is one of the most common ways people choose to handle businesses after divorce.
The spouse who has had the most involved in the business will be awarded the business itself.
The compensation your spouse will receive will be based on the business’ characterization and its overall value.
Find a Good Lawyer
It isn’t uncommon for people to want to keep the divorce process as simple as possible. They’ll decide to “go outside” the court system and just settle things among themselves.
Settling things out of court is very bad divorce advice for a business owner. Things may be amicable with your spouse, but they may not always be.
Verbal agreements and promises don’t hold up in court, but agreements drafted by lawyers can.
If you find a good lawyer, you may find that you spend less time in court because they’re able to draft agreements you can both agree on.
When you’re going through a divorce, some people may advocate trying to “hide” certain assets from spouses to ensure that they don’t have a legal claim to it.
Some may choose to alter accounting records to make it seem like the business is making less money.
Others may resort to drastic means like temporarily signing over their business to friends or employees so that it “technically” isn’t there.
This may seem like a viable way to keep your business, but it’s some of the worst divorce advice you could ever get.
Hiding assets can result in a variety of legal penalties, including monetary sanctions.
A judge could rule that you give up your share of a remaining asset to your spouse to make up for what you tried to hide from them.
In some extreme cases, a judge may require you to pay more support to your spouse until you essentially pay back what you took. If you hide business assets, that could be tens of thousands of dollars.
Overall, it isn’t worth it to try to hide assets from your spouse. Be open and honest about what you have.
Now that you have some divorce advice, you know what to expect. Take some time to focus on building up your business can you can ensure it can withstand your upcoming legal battle.
Take time to browse all of our business articles for more great advice. If you want to speak to other entrepreneurs, start a conversation in our business forum.