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Protecting a business during a divorce

On Behalf of | Oct 6, 2020 | Divorce

Married couples in Florida and throughout the United States will terminate their marriage through divorce almost 50% of the time. When this happens, divorcing couples must split up the assets they have gained during the marriage. The division of assets can become more complicated when one or both of the spouses own a business.

The divorce process will consume much of the time, focus and energy of the parties to a dissolving marriage. The attention given to a divorce can make it difficult for a business owner to continue with the focus needed to maintain company operation.

Divorce can also present complications for individuals who are prominent shareholders in companies. The possibility exists that a non-owner spouse will receive sufficient shares in the company to become an unwanted partner. This development can cause chaos for the spouse who owns the shares in the company. Partners and other shareholders may also be unhappy.

Business owners can protect their business interests from divorce by taking time to plan for this possibility. Prenuptial and postnuptial agreements are great for protecting business interests during a divorce.

Spouses can agree also to keep business and personal finances separate. This verbal agreement may not offer 100% protection in court, but it will help eliminate confusion between marital partners.

Another suggestion is to start a trust that acts as the owner of the business. When a divorce occurs, the company is not in the name of a divorcing party and, therefore, not subject to property division. However, divorcees who use this tactic should familiarize themselves with the laws covering the transfer of assets in a trust.

Divorce and the ensuing fights over money and property are never easy. However, the process can grow costlier for business owners in a divorce. A family law attorney may represent business owners who are getting divorced and want to protect their best interests.