If you’re a business owner marrying the love of your life, a divorce is the last thing that should be on your mind.
Walking down the aisle, exchanging vows, and heading on a honeymoon are great. But far too many marriages go off the rails after both parties decide enough is enough. A divorce could jeopardize your business unless you’re careful before tying the knot. That’s one reason to pursue a prenuptial agreement and other measures before walking down the aisle.
Here are five ways to safeguard your business interests during a divorce.
1. Prenup or Postnup
According to one source, 50% of U.S. adults are open to signing prenups. Even so, only 20% of married couples have such a pact. Of course, prenups typically work best in situations where there’s a substantial income disparity between the married couple.
If you enter a marriage as a business owner, protecting your stake in the company is vital. It’ll help you avoid situations where a divorce costs you your company or harms it somehow.
What do you do if your partner doesn’t sign up for a prenuptial agreement as a condition for getting married? You’ll want to weigh whether the risk is warranted. But if the marriage goes south and ends in divorce, you’ll wish you had gone the prenup route to eliminate stressful and unnecessary uncertainty.
A post-nuptial agreement could be possible if you get married without one despite the importance of a prenup. That’ll largely depend on your spouse’s willingness to sign one now. However, a judge might not look favorably upon a postnup if it is signed shortly before a divorce.
2. Speak to a Family Law Attorney
A consultation with a family law attorney can be your best investment before getting married. It’s easy to focus on all the positives of married life without thinking critically about what can go wrong. You owe it to yourself to speak to a lawyer about a prenup. Ask questions, get answers, and make informed decisions to protect your business interests.
Speaking to a family law attorney can dispel any myths or misconceptions you have about prenups. They’re not about robbing one party while enriching the other. They’re about protecting assets brought into the relationship, so a prenup is about fairness. Again, your best bet is to speak to a family law lawyer to discuss the ins and outs of a prenup agreement.
3. Keep Business and Family Separate
If you own a business before getting married, keep business and family separate. Hiring your spouse to work for the company is not the best idea. If your spouse has been your employee for a long time, a lawyer can argue that your spouse’s contribution greatly influenced the growth and profitability of the business. And that could mean divvying it up if there’s a divorce.
4. Put Your Company in a Trust
You can also place your company in a trust. Going this route means the company will not be legally deemed a marital asset. Another reason to go this route is that a trust will safeguard the increasing valuation of your business.
5. Buy Insurance Policy
Yet another option is to take out an insurance policy. If a judge orders you to give your spouse a stake in the company, you can use the insurance policy proceeds to pay your spouse the value of their share in the company. You can, by so doing, retain control of your business.
Consider these five options if you’re a business owner planning to get married. Many problems can be avoided by hiring a family law attorney before getting hitched. While no one gets married hoping for a divorce, unions sometimes end.
If that happens to you, don’t add insult to injury by putting your business interests at risk.
