How to protect your business during divorce

The thought of losing your business because of divorce is a fear for many people in South Carolina and throughout the country. Divorce can affect your entire life, including the success of your business and financial goals.

What to consider when you own a business

The impact on your business will vary, depending on the actions you take prior to and during your divorce. What can you do to protect your business? The most important step to take is to work closely with your attorney to discuss your options. Beyond that, it is helpful to understand how your business may be affected and divided by your divorce so you can take steps to protect your company.

Here are some questions to consider to better prepare for divorce negotiations with your attorney:

  • How will the business be divided? Anything considered martial property will be divided between spouses during divorce. Some or all of your business may be considered martial property, which is subject to division between spouses. Even if your spouse does not share ownership, if he or she contributed to the business during your marriage, he or she may be able to receive part of the business during property division.
  • Do you have a prenuptial or postnuptial agreement? These agreements can play a big role in divorce settlements if they are valid and enforceable. Both types of agreements can state how a business, along with other property and assets, will be divided in the event of divorce. Be aware that these agreements can be challenged or determined to be invalid by the court during divorce so it is vital to have your attorney review these arrangements and plan for any contingencies.
  • Do you have a partnership, shareholder or operating agreement? These agreements can protect you and any partners or shareholders. It is best for these agreements to include a provision to protect all owners if one owner gets divorced. This could involve having unmarried partners or shareholders obtain a prenuptial agreement that waives their future spouse’s rights to the business. It could also involve a stipulation that prohibits any transfers to a partner or shareholder’s spouse without getting approval from all other parties involved in the business. This can prevent disputes among business partners and protect each owner’s interests.
  • Should you provide a payout to your spouse? Paying off your soon-to-be ex spouse is something to consider if you were business partners or if your spouse has rights to some part of the business. The payout can come from your share of martial assets, you can reach an agreement to make payments to your ex for a specific time period or in some cases, you can sell the business and divide the profits. This is not an option many people want to take, but in some cases it may necessary.

These are important questions to consider when discussing your divorce strategy. Life after divorce is complicated, but you can minimize the risks to your business by taking proactive steps to protect yourself, your partners and your business. Your attorney should be able to help you better understand how your divorce will impact your business and what action you can take now to protect your business interests.

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Greenville, SC 29601

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