What Becomes of Your Business When You Divorce?

The divorce rates in the United States are staggering. Recent studies show that, among those who marry for the first time, 52 percent can expect to get divorced. Those who marry for a second or third time have an even higher risk of divorce at 70 percent.

If you own a business, then how that will be divided up when you divorce depends on when it was set up, how it was set up and whether you have a prenuptial or postnuptial agreement in place.

Any business that you set up together with your spouse after you married will likely be considered as a marital asset and be divided up equally between the two. One of the only ways to avoid this is if your prenup, postnup or corporate charter reflects otherwise.

Hopefully, if you came into the marriage with your business, then you signed a prenup with your spouse to protect your company's interests. If you did, then most likely your business partners required you to have your spouse waive their ownership rights to the company at the same time.

Your partnership agreement may also reflect that no one can take on any ownership responsibilities in the company, even if its a spouse, without you first receiving approval from other owners. If such an agreement exists, then even in the absence of a prenup, this can help protect against your company getting split up in a divorce.

In the absence of a prenup or partnership agreement to protect your company's interests, your only solution will likely be to see if your ex is willing to accept a payoff or a buyout of his or her rights to the business.

To do this, you might let him or her know that you're willing to hand over more of your marital assets in exchange for keeping the business in your own hands. Alternatively, you may wish to sell off the company and split the proceeds or simply sign a promissory note to pay your ex dividends over time.

If you're considering divorcing your spouse and you have a business that you're hoping to keep intact, then a Naples complex asset division attorney can advise you as to how to go about doing that.

Source: Inc., "How to protect your business in a divorce," Jeff Landers, accessed Oct. 13, 2017