4 Things Business Owners Need to know About Divorce
You’re 35, you own your own business, and it’s making money. You get to be your own boss and the dream you’ve been working toward since college is finally falling into place.
Then your spouse asks for a divorce. Not only is your personal life changing dramatically, but your business could be in jeopardy. Below are five things you must know to protect it.
1. The best protection is a prenup.
Naturally, if you’re already married and you don’t have a prenup, it’s too late – though you could consider a post-nuptial agreement. Either way, this is the best tactic to protect your business. You simply craft a prenup states that your company doesn’t count as an asset that needs to be divided, but belongs to you alone.
2. You can negotiate with your spouse.
So you don’t have a prenup and your spouse won’t sign a postnup so close to the divorce. There are still things you can do. It pays to negotiate with your spouse. Be civil and work toward an agreement that helps both of you. For example, if you care about keeping your company 100 percent in your hands more than anything else, but your spouse doesn’t know where he or she is going to live, your spouse may be happy to take 100 percent of the home – rather than selling it and splitting the proceeds – in exchange for his or her half of the company.
3. You need a realistic valuation.
One of the keys to using this tactic lies in getting a true valuation of the company. Remember that this may not be the same as the money you put into it. For your purposes, it may also be helpful to have the valuation come in as low as possible. Don’t take it as a slight if you think your company is on the rise and worth $1,000,000 when a financial expert says it’s only worth $400,000. The low price makes it easy for you to buy out your spouse so you can work on getting it to that $1,000,000 goal.
4. Be professional.
Yes, a divorce is personal. But you must remember that dealing with your company brings you back to the professional side of the process. Be honest. Don’t try to hide assets. Don’t refuse to speak to your spouse. Don’t fight over trivial things because you’re feeling so emotional. Try to keep a calm outlook at all times, focusing on your professional future and what you need to do for your company. This mindset puts the company first and helps ensure an agreement you’ll be happy with in five years.
Divorce is hard for anyone, but it’s especially complicated for young business owners. Make sure you know your legal options and what you can do to protect your company and seek an outcome that keeps it intact.
