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Preparing for divorce when you are a business owner

On Behalf of | Feb 10, 2022 | Divorce |

Divorce can be jarring whether you decide to file first or if your spouse surprises you by taking the lead. You may worry about what will happen to your home, kids, retirement savings, investment portfolio and business.

You may particularly wonder what will become of your company if you own it with a business partner and your spouse attempts to stake a claim in it. There are some details detailed below that you’ll want to weigh as you prepare to weather the divorce process.

Was there a prenup or postnup agreement in place?

If you launched your business before you married, the best-case scenario is that you have a prenuptial agreement in place protecting your company and its profits for you. If you started your business after you married, you hopefully did your best to protect it in the eventuality of divorce by entering into a postnuptial agreement. If neither a prenup nor a postnup agreement exists, then start by retrieving your partnership agreement from your files.

Review your partnership agreement

Once you find your partnership agreement, you’ll want to read the terms and conditions or contingencies it contains. One of these may detail procedures each of you has agreed to abide by if a family dispute, such as a divorce, arises. These terms may give you some advance guidance about how your divorce impacts your partner and your collective business.

Pull your company’s financial records

Your spouse will likely immediately file a request for your company’s financial records and request a valuation of your business if they think there’s any chance of staking a claim to it. However, you shouldn’t readily turn this information over to your spouse as they may not be entitled to it, or it may contain confidential information about your operation. You may want to wait for a judge to order you to share these records.

Not protecting your business during a divorce can be a costly mistake

Divorces can be financially devastating if you haven’t taken adequate measures leading up to or following your divorce to protect your interests. Your divorce can also adversely impact your business partner if you have your own company. You’ll want to carefully consider this point as you weigh when to tell your business partner about your divorce and how to best protect both of your interests as you move forward with ending your marriage.