Divorces are never easy, but they can be particularly difficult when a business is involved. A high asset divorce involving a business can be even more stressful. It often contains complexities that don’t exist with smaller, mom-and-pop operations.
This article aims to give you helpful information on how to protect your business in a high net worth divorce, maximizing the impact on your company.
Get a Business Valuation
Obtain a professional appraisal or valuation of your business to establish its fair market value. This will be important in determining how the business should be divided in the divorce.
In most cases, the business will be valued by assessing financial statements and inventory reports. If the business has intangible assets such as patents, client lists, and business goodwill, then it may be necessary to hire an expert appraiser. Accurate documentation and recordkeeping are essential to determining your business’s worth.
Consider a Prenuptial or Postnuptial Agreement
This document can outline the ownership and asset distribution in your divorce. These agreements do not have to be one-sided. They can easily benefit both partners equally while removing the need to attend court.
Make sure to involve a competent lawyer when drafting a marital agreement. They can ensure that your interests are duly represented, and your business is properly protected.
Keep Meticulous Records
Maintain accurate and detailed financial and operational records of your business. This can help you demonstrate your contributions. It can also make sure that any of your spouse's claims are based on clear evidence.
Separate Personal and Business Finances
Keep your personal finances separate from those of your business. Avoid using business funds for personal expenses and vice versa.
Mixing personal and business finances can complicate the divorce process and risk the loss of personal assets. Using your business for personal matters can co-mingle the asset with your marital property. This will make it harder to determine true ownership later.
Consult With an Attorney
Work with an experienced business attorney who can guide you through the legal and financial implications of your divorce. Ford & Friedman can help with all aspects of a high asset divorce, including property division, tax consequences, and ongoing operations.
Explore Alternative Dispute Resolution
Consider mediation or other methods to resolve any business-related disputes in your divorce. Doing so can help you avoid costly litigation and maintain control over the outcome.
When you are going through a divorce, it is important to take a proactive role. “Getting ahead” of the situation can protect your business and minimize the impact on it. The key is to be organized, prepared, and represented by a good lawyer. By following the tips presented here, you may be able to keep your business and love life separate. Remember, stay focused on what’s important, and do not let the process take a toll on you emotionally and mentally. With diligence and legal guidance, you can remain successful on the other side.
If you have concerns about how your divorce will affect your finances, we are here to help. You can schedule time with us online or contact our team directly by calling (702) 904-9898.