No one wants to believe that their marriage is doomed to end in divorce, especially after taking vows to stick with your partner through bad times along with the good, and in sickness and health.
The end of a marriage can be emotionally devastating, especially if children are involved. However, your split can become more contentious and complicated if you own a business and do not have a prenuptial agreement spelling out how it will be distributed.
Dividing a business during divorce
In most relationships, one spouse runs a business while the other can be directly involved in its growth and operation or participate indirectly by making sacrifices. To help assess each spouse’s share without a prenup, there are steps you can take to help determine a fair division of assets:
- Establish yourself as the sole owner and stipulate that the business cannot be transferred in the event of a divorce, in which case a cash award may be made to the spouse.
- Keep detailed records of capital used for business expenses, such as paying rent or setting up office space, and whether it came from pre-marital or marital funds.
- Separate business and personal expenses as any comingling can add unnecessary complexity and potentially hurt your settlement.
- Document any cash transactions.
- Be aware that paying yourself an income below the market standard could result in negative consequences when support is determined.
- Pay your spouse market rates for their work, even if they contribute in a minor way to the business. If you don’t, they may seek a higher percentage of the company’s worth.
Preserve your business legacy
Dividing marital property during divorce can be an overwhelming and contentious process. However, it’s vital that discussions remain positive and respectful when determining your business’s future. An experienced family law attorney here in New York will protect your interests. Your attorney can help you put a postnuptial agreement in place while you are still married, negotiate for the best possible settlement once a divorce commences, or fight for you in court if necessary.