Starting and growing a business takes a considerable amount of time, effort, patience, and money. Once you’ve established your company, it’s crucial that you take the proper steps to protect your ownership of it after your divorce.
Plan in Advance
If you haven’t yet married or started the divorce process, you can take precautionary steps to protect the future of your business. By drafting a prenuptial or postnuptial agreement, you can outline what will happen to your business in the event that your marriage does come to an early end.
You could also work to ensure that a business you started while single continues to be regarded as separate property even after you marry by strictly managing your company’s finances. Whether your business becomes community property depends on:
- The date one or both spouses started or joined the business
- The date of the marriage
- The amount and source of money used as business capital
- The amount the couple invested in the business
- Each spouse’s involvement with the business
If the court finds that both spouses are either directly or indirectly contributing to the business, such as by using marital money to fund business growth, it will become marital property.
Consider Nonconfrontational Methods of Separation
By pursuing a collaborative divorce or mediation, you can attempt to reach an agreeable settlement that works for you and your business. Working towards a solution outside of court gives you the opportunity to have the final say in the future of your business, rather than leaving it up to the court to decide, which could potentially leave you with an unsavory outcome.
Think About the Future of Your Business
Even if your relationship as marital partners falls flat, you and your spouse may be ideal business partners. Think about what is best for your business, as well as for your own wellbeing. Consider the future as co-owners compared to maintaining sole ownership. It may be in the business’ best interest to continue running the company together.