Continued from Part 1
A divorce can have a significant impact on a business, and there are steps you can take to protect yourself and your business.
The first thing you should do is seek legal counsel. The Glendale divorce attorneys at The Sampair Group will work with you to make sure that your business is protected as well as all of your rights as a business owner.
As a business owner, planning ahead is extremely important. A prenuptial or postnuptial agreement can be the determination for how the assets are distributed in the event of a divorce. These documents can be difficult to navigate through, but most of them should have the following requirements included:
- The agreement must be in writing
- It must be executed voluntarily and without coercion (having your fiancé sign a prenup the day before the wedding is a good way to invalidate that prenup)
- There must be full disclosure (no hiding of assets) – this is another way to invalidate a prenup
- The agreement cannot be unconscionable (this is also another way to invalidate a prenup). For example, if you’re making millions, don’t expect to get away with only giving up the silverware in the divorce, even if that’s what’s in the prenup.
- It must be executed by both parties, preferably in front of witnesses (or a notary)
- Through a prenuptial agreement, each party can decide ahead of time (before a divorce is expected) how marital property will be divided.
- If you don’t have a prenuptial agreement, it would be wise to get a postnuptial agreement (an agreement made after marriage). It won’t be as strict as a prenup would, but it would assist in making sure your assets and your businesses are protected.
If you don’t have either of these documents, hire a joint financial expert that can help value the business and determine ways to keep costs down. To avoid the sale of a business, discuss possible settlement options with your lawyer, who can then discuss these terms with the legal counsel for your ex-spouse.
Have a team of smart personal advisors by your side as often as possible to help you double check all decisions before making them, especially if they include your business. They may be able to think more clearly than you are when it comes to making such decisions, since your mind will be preoccupied with the stresses of divorce.
If there are multiple business owners, the business partnership agreement or shareholder agreement can address a methodology of buyout or valuation of interest if a divorce is filed against one of the business owners. The court would likely respect this as it shows intent to minimize business disruption despite the personal happenings outside of it.
If you are going through a divorce and you are worried about how your business will be affected, The Sampair Group can help.