Posts Tagged ‘how to protect your business during divorce’

How to Divide Your Assets during Divorce If Your Spouse is A Co-Owner of Your Business

Tuesday, May 3rd, 2016

Many small business owners often co-run the company with their spouse, and while this is a smart tactic when it comes to filing taxes and other financial duties but if the marriage does not last, the demise of the partnership is not far behind. Unless there is an existing prenuptial agreement that discusses what will happen in the event of a divorce, the process of dividing shares and valuing the business overall can be dragged on for years in legal battles.

Frequently, this legal issue can lead to the destruction of the company, as all of the attention, emotions and energy go into the divorce and the splitting of assets. Along with a prenup, spouses that are co-owners of a business should look into buy-sell agreements, which are contracts that detail how co-owners in a business, the spouses, would buy or sell their interests if it need be.

To reiterate, it will be necessary to have the business valuated at some point in the divorce, and as tempting, as it may be for both partners to get their own valuators, the reality is that valuation companies and experts are extremely expensive, and there is nothing more to gain by having two valuators.

And the most important thing to remember, no matter how attractive the idea may be, do not split the company in half. That absolutely never turns out well for either spouse or the company.