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How to protect your business against divorce

When you're starting out your married life, it is often difficult to anticipate how things may play out. Unfortunately, nearly half of all couples who marry eventually decide to divorce.

If you are a business owner, or if you are thinking of starting your own business, it is wise to consider how to protect your business against a potential divorce. Here are a few tips.

A prenuptial agreement can be GOOD for your marriage

Prenuptial agreements tend to have a bad reputation in America as measures only greedy rich people would even consider. Here in North Carolina, our Southern hospitality and kindness often tell us to avoid such unsavory things in favor of good old-fashioned trust.

For business owners, however, a prenuptial agreement can help ensure that the business's success is not tied to your marriage's success. This is crucial, especially for businesses with employees.

Surely your soon-to-be spouse would not want to be responsible for your employees' jobs being at risk. A good prenuptial agreement can remove business stresses from affecting the marriage itself, and, ultimately, can make for a stronger marriage.

What to do if you do not have a prenuptial agreement

For whatever reason, you may choose not to establish a prenuptial agreement to protect your business. If this is the case, there are still some ways that you can protect your business from being torn apart during divorce proceedings.

Strongly consider taking these steps to protect your business if this situation applies to you:

  • DO NOT mix personal and business finances. To protect your business from being viewed as potential marital property to be divided, it is essential that you keep these two institutions as separate as possible. This includes borrowing from personal assets (which almost certainly will be considered marital property) and keeping excellent financial records to demonstrate that you operate personal and business finances independently.
  • Pay yourself a salary that is competitive within your field. While this may seem counterintuitive, it can protect you from a spouse claiming that there is more in the business that he or she could claim.
  • Avoid employing your spouse in the business. This can create precedent for claiming that he or she was a fundamental part of the business's success, and should be compensated accordingly.
  • Have an independent valuation done for the business to establish what it is worth apart from you. If possible, do this before or soon after getting married.

Taking great care to keep your personal and business finances as clearly separated as possible can help both your marriage and your business thrive.

Beyond taking these precautions, you may want to consider hiring a lawyer who has extensive experience with divorce, especially divorces with complicated assets. An experienced divorce lawyer can help keep marital things from getting too messy, and steer you clear of potential pitfalls and roadblocks if and when they do.

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