If you are like most successful entrepreneurs and other business owners, the business itself represents your life work. It is one of the most important aspects of your life, something you want to protect against any attacks and challenges.
However important a business can be to entrepreneurs, many don’t properly protect their businesses against the potentiality of divorce. Dissolution of marriage is one of the most dangerous enemies of business. Many divorces end with businesses being liquidated or co-ownership structures which are detrimental to the spouses with original ownership.
How to Protect Yourself and Your Business
A recent article in MarketWatch discusses protecting your family business in divorce. There are a number of important ways to protect your business in divorce. Assuming
- A prenuptial agreement: It is always best to handle the details and add the proper protections for your business in divorce long before a divorce is even a consideration. Before you get married, a prenuptial agreement (or a postnuptial agreement once you are married) is a great way to make sure your business is not divided in divorce.
- A buyout agreement: One of the most powerful tools to protect your business is a pre-emptive buyout agreement that triggers an automatic buyout in the event of a divorce and specifies the cost-structure parameters.
There are also options to dissolve, divide or share business ownership after divorce. However, these methods often don’t work for a couple that has divorced and business owners who do not want to lose control and ownership of a successful enterprise.
Assuming you want to keep your business and protect your ownership interests, the most important thing you can do is plan ahead. Talk with an experienced lawyer about drawing up the proper documents and agreements as early in the relationship as possible, so you can protect your business and your future.