After spending years or even decades building and nurturing your business, the last thing you may want is to lose all or part of it during a divorce. The truth is that you will need to take some steps in order to keep your business intact should this happen.
If you had the opportunity and the forethought to do so, you entered into a prenuptial agreement with your future spouse in order to protect your business. If you didn’t, or your spouse declined to enter into the prenup, then you will have some work to do during the divorce process.
The protections begin as soon as you get married
You may not have a problem with your spouse receiving some well-deserved compensation regarding the business. But you don’t want him or her to take so much from the business that it jeopardizes its future. You just want to make sure you still have a business to run after the proceedings end. To help achieve that goal, you will need to start protecting your business from the start of the marriage by doing the following:
- Make sure to keep your personal and business accounts separate. If you use business funds for personal use or use personal funds for the business, that could blur the lines of ownership in a divorce.
- Take a salary from the business that reflects current market values in order to maintain the separation between you and your business. You probably chose to form an entity that provides you with personal liability protections for the same reason.
- Review your business formation document to make sure it is not transferrable upon divorce. If the documents do not include this, you may want to amend them to reflect your sole ownership, and that ownership cannot change due to divorce.
- Make sure you document any cash transactions of the business well.
- Make sure you have detailed records regarding the source of any capital for the business.
- If your spouse works in the business alongside you, make sure he or she receives a market value salary as well, to preclude the contention that he or she deserves a larger percentage of the business to reflect the contribution made.
Taking at least these steps could help your business remain intact after a divorce. Of course, depending on your particular circumstances, you may need to take additional precautions. In order to put your mind at ease, you may want to consult with an Oregon divorce attorney to create a plan that will accomplish your goals should you divorce.