The divorce rate may not be as high as some people think it is, many marriages end this way. In the United States, approximately 41% of first marriages end in divorce. The divorce rate jumps to 60% for second marriages and then a full 73% for third marriages. While the process is never fun, divorce for business owners can be particularly tricky.
If you own your own business, you may be concerned about what would happen to it if you were to get a divorce. Would you lose everything you worked so hard to build? There are specific tips to help with a divorce for business owners to prevent that from happening.
- Draw up a prenuptial agreement. You are in love and want to get married. You may never think your relationship will end, at least that is what your heart is telling you. Your head may have other ideas. You will need to have a family law attorney help you draft the actual agreement. Many are not actually legally binding, though even then, they can be effective. According to the Law Commission, you need to make yours a “Qualifying Nuptial Agreement” to make sure it is legally binding. Family divorce lawyers can walk you though this process. This may not be the most romantic idea ever but it will protect your business.
- Consider a post-nuptial agreement. This is going to be a lot harder to get the other party to sign but it is possible. These are agreements that are similar to the pre-nuptial agreement but they are drafted and signed after the wedding. So, if you got all impulsive and hit the Vegas wedding chapel, there is still a chance you can get something in writing to protect the business you have worked hard to create and build.
- What was the status of your business when you got married? If your business is up and running and very successful when you get married, your spouse will have a lot less of a claim on it when you divorce. If you start it and build it while you are married, the court is more likely to see it has being marital property. Any assets generated during the marriage may be considered to be owned by both of you. Courts have a lot of latitude in how they view assets acquired and/or increased before vs. during the marriage. The status of the business before the marriage begins can make a big difference in the complexity of the divorce for business owners.
- What should you do if your spouse wants to invest in your business? There are a lot of problems that can come from having a spouse invest in the other spouse’s business. If something goes wrong with your company, having them invest in it can cause a lot of tension between the two of you. Even if your business is a total success, going into business with a spouse is something that can cause a lot of friction in a marriage. Should you end up divorcing, the business goes from being owned by one party to both and that does complicate matters quite a bit.
- How involved in your business do you want your spouse to be? Remember that your spouse does not have to invest directly to make a contribution to your company. If they support you while you are creating and building a business, the court may see it as being at least partially owned by them. The amount of actual work they do towards making you company a success will be weighed by the court when you file for a divorce for business owners. No, you may not want to think about what to do with your business if you divorce when you are not considering leaving your spouse but be careful about going into business with someone with whom you are romantically involved.
Many people dream of starting their own business. No one dreams of having to protect that business from a soon to be ex-spouse. If you are an entrepreneur and have your own company and want to get married, there are things you can do to protect your investment and keep your business if you divorce.