Nothing about divorce is easy, and that’s true even if you are both in agreement about everything and are approaching things in a civil matter. You still have to ensure all the legalities are considered and followed through with, which is one reason most experts recommend working with a lawyer. When you get into the details of property division, things can get complex, and that is never more true than when a family business is in play.
Protecting the family business can be difficult in divorce if you haven’t taken precautions. One way you can protect an existing family business if you get married is via a prenup. It might seem like a cutthroat and unromantic move, but the right prenup actually provides benefits and security for both parties. You can, for example, ensure that the family business stays intact while also providing some financial, non-business means for the other party.
What if the business didn’t exist before you got married and it’s something you built together? Even if one spouse put more direct effort into the business, it’s likely that the other person provided support in indirect ways such as caring for children, working to pay bills or taking care of the home while the business developed. In such a case, one person might buy the other person out of the business. You can also continue to work together or own the business together even if you aren’t married, though you’ll probably want to set some strong legal ground rules to increase your chance of success.
If you’re worried less about your own marriage or divorce and more about future generations, you can use trusts to protect your family business assets should one of your heirs get divorced. For more information about protecting business assets during divorce, consider working with an experienced family law professional.
Source: Marketwatch, “How to protect your family business during a divorce,” Feb. 10, 2017