Protecting Your Business During a Divorce: Key Considerations
Owning a business while going through a divorce presents unique challenges. At Washington, Dreyer and Associates, we understand the complexities involved and are here to help you navigate these difficult waters. This blog will explore key considerations for business owners facing divorce, including the potential impacts on the business, protective measures, and strategies to ensure the business continues to operate smoothly. What Happens to the Business in a Divorce? When a business owner goes through a divorce, several factors come into play regarding the business’s fate. Understanding these factors is crucial to protecting your business assets. Starting a Business Before Marriage If you started your business before getting married, there are specific protections you can leverage. One important strategy is valuing the business at the time of marriage. By doing so, you can argue that any increase in the business’s value during the marriage should be less significant, thereby reducing the portion considered marital property. This approach helps shield your business assets from being entirely subject to division. Starting a Business After Marriage On the other hand, if you started your business after getting married, the situation becomes more complex. In this scenario, the entire business might be viewed as a marital asset, which means it could be divided in various ways, such as 50/50, 70/30, or 80/20, depending on what a judge or jury decides. If the business is to be split, a valuation must be conducted, and terms for buying out the non-active spouse must be established. These terms can be intricate, requiring experienced guidance to ensure fairness and protect the business. Ensuring Business Continuity During Divorce Maintaining business stability during a divorce is vital. Here are some strategies to ensure your business continues to run smoothly: Understand Business Operations: Provide detailed information about how your business operates. This helps craft a solution that allows the business to function during the divorce process. Protect Business Payments: If a spouse receives payments from the business, ensure these payments continue in exchange for the spouse not interfering with business operations, especially if they have been a non-active partner. Maintain Stability: Businesses thrive on stability. Prevent non-active spouses from becoming involved in business operations during the divorce, ensuring the business remains stable. Strategies for Business Asset Division Protecting your business assets during a divorce involves strategic planning and sound advice. Here are some effective strategies: Valuation and Buy-Sell Agreements: Place a valuation on the business and set up a buy-sell agreement to protect business assets. This ensures fair compensation for the non-active spouse while keeping the business intact. Alternative Asset Division: Use other assets to compensate the non-active spouse. For example, instead of splitting business equity, offer a larger share of the house equity. This approach helps keep the business under the active owner’s control. Experienced Business Litigators: Work with experienced business litigators who understand the intricacies of business valuations and asset divisions. Their experience is crucial in ensuring your business remains protected and functional during and after the divorce. Conclusion Divorces involving business owners require careful planning and experienced guidance. At Washington, Dreyer and Associates, we pride ourselves on having experienced business litigators who can help you protect your business assets and ensure its continued operation. By understanding the specific protections available and implementing strategic asset division, we help business owners navigate divorce without jeopardizing their business’s future. Call Washington, Dreyer and Associates for Representation! If you’re getting divorced as a business owner, having the right representation on your side is critical. Need legal advice? Contact Washington, Dreyer and Associates today! We have extensive experience helping business owners successfully navigate the complexities of ending their marriages and we can help you do the same.
