Protecting your business in the event of a divorce
Going through a divorce can be one of the toughest periods of your life, it can vary on the arrangements and how the relationship is left, but for a business owner divorce is more complex. Having to protect and potentially divide your business is a difficult process and the business itself becomes under scrutiny, depending on the couple’s reasons, property conveyancing could also be a topic that needs to be covered. Trying to be one step ahead can be tough, as divorce isn’t usually expected in the long run so here are a few ways to protect your business.
Make Everything Simple
If your spouse is entitled to some of the business then it isn’t just your job anymore, it’s an asset. You will have additional eyes looking into your business to learn about its worth, profit and function. When the divorce proceedings start, the business is an asset, and even the most amicable divorce can turn sour under a small disagreement. It is important to organise your case early and make everything transparent, being able to guide the process is a lot better than defending yourself and being on the back foot.
When Was the Business Created
You can make a case that your business is a non-matrimonial asset if you created it before your marriage, a mistake some business owners make is inviting their spouse to become a director on the board, which means determining their entitlement to the company is more complex. Not to say bringing your spouse on originally is a mistake as they may contribute positively, but if they are, it does make managing the assets in a divorce harder.
If your divorce escalates to the courts, a business owned by yourself will be treated differently to a business owned by multiple people. If you do have a business partner this will ensure that the whole business isn’t considered completely in the divorce proceedings.
Your Will and the Business
Planning to pass on the business to your children when you retire can play a big part with how the courts treat you, and potentially how your spouse treats you. Check your will is up-to-date and mentioning your intentions with the business can help your case.
Business and Private Assets
If it’s not too late, mixing private and business assets should always be avoided where possible. In the later stages of business, it sometimes can’t be avoided, so making a rule of it from the beginning can help lessen the confusion. If your home, for example, has been used as an asset for your business it can cause extra complexity to the decisions of splitting assets.
Be honest and clear about your spouse’s contribution, if they helped in the early stages then make sure you explain it. Being honest will only help your case in the circumstance that your spouse over exaggerates their contribution.
It’s never going to happen at convenient time and divorce unpredictable. Putting these affairs in order may just help your business in other ways or just give you peace of mind that it is safe.