How to Protect Your Business in Divorce

Keeping Your Livelihood Secure With a Marital Agreement

Business owners often face a more complicated divorce process than those with conventional staff jobs. With the future of their company at stake, the tensions, and risks, are high. Luckily, there are steps that a business owner can take to minimize the potentially detrimental effects of divorce.

How California Divides Property

As a community property state, California divides marital property equally between spouses. For business owners, this jeopardizes more than just their brand. Many business assets are subject to equal division, including:

• Business machinery
• Business real estate
• Profits

When left up to the court, the business owner’s spouse will be awarded 50% of all marital business property. However, a couple can negotiate their own terms for asset division, thus giving an owner the chance to protect their company.

Protecting a Business with Marital Agreements

Entrepreneurs who established their business before marriage have a chance to protect their empire with a prenuptial agreement. Even if they’re unable to finalize the paperwork before their wedding day, they could rely on a postnuptial agreement to protect their sole ownership.

Marital agreements are legal contracts. Before they are accepted by the court, however, they must meet certain requirements. Prenuptial and postnuptial agreements must:

• Be lawful and generally fair
• Be signed by each party after ample time for review
• Entered into willingly
• Exist in writing

Marital agreements allow a couple to establish protocol for how their assets and liabilities would be divided after divorce or death. By using the document as a vehicle to protect one’s business, an entrepreneur can be confident that they will retain ownership of their venture should the marriage come to an end.

What if My Spouse Has Partial Ownership of My Business?

In the event that your life partner is also your business partner, you have options should you want to end your marital and business relationship. You could use other marital assets in an effort to buy out their stake in the company, or negotiate a long-term payoff plan.

Alternatively, in the event that a couple cannot reach a fair decision on how to divide their shared business, they could opt to sell it and divide the profits.

Contact The Law Office of David A. Martin & Associates for help with your divorce case.