Divorce is a challenging process that can impact every aspect of your life, including your business. If you are a business owner facing divorce, there are certain steps to take to protect your interests and ensure a smooth transition.
By knowing what you can do to keep your enterprise intact through a divorce, you can ensure that you will maintain your livelihood even after a difficult split.
Assess the value of your business
Start by determining the current value of your business. This involves a thorough evaluation of your assets, liabilities and financial records. Accurate valuation is helpful in the division of assets during the divorce proceedings. Hiring a qualified business appraiser can help you get an objective assessment.
Separate personal and business finances
One of the most important steps is to separate your personal and business finances. Open a separate business bank account if you do not have one already. Avoid mixing personal and business expenses, as this can complicate the division of assets and debts during the divorce.
Consider a prenuptial or postnuptial agreement
If you are not yet married or even if you have already tied the knot, it may be wise to consider a prenuptial or postnuptial agreement. These legal agreements can outline the handling of your business assets in the event of a divorce.
Update your business structure
Review your business’s legal structure and consider whether it needs updating. Changing your business structure, such as transitioning from a sole proprietorship to a corporation or LLC, can offer greater protection for your business assets in case of divorce.
Statistics suggest that the divorce rate for business owners may be as high as 48%. With that figure in mind, preparing to divorce-proof your business may be a prudent idea even if divorce is not necessarily on the table.