The stability of your business may be at risk when faced with the challenges of a divorce. It is in your best interests to protect your business and related assets during such times.
By keeping some common strategies in mind, you can take steps toward divorce-proofing your business. By doing so, you ensure its continued success and maintain a valuable source of income during an uncertain time.
If you are not yet wed, consider discussing a prenuptial agreement with your future spouse. This legal contract can outline the handling of your business assets in case of divorce. It can safeguard your business from division as part of the marital property. If you are already in a marriage, a postnuptial agreement is equally valid.
Proper business structuring
Selecting the right legal structure for your business is an important step. A limited liability company or corporation can offer a level of protection, as they separate personal and business assets.
Keep finances separate
Mixing personal and business finances can complicate the division of assets during a divorce. Maintain separate bank accounts, credit cards and financial records for your business to demonstrate its distinct identity.
Mediation and collaboration
If divorce becomes inevitable, consider mediation or collaboration as alternative dispute resolution methods. These approaches emphasize open communication and finding mutually beneficial solutions. This reduces the likelihood of a contentious legal battle that could harm your business.
Statistics indicate that the divorce rate for business owners may be as high as 48%. For this large amount of entrepreneurs who may experience a marital split, knowing how to keep the business intact is important for protecting one’s livelihood.