After working hard to build a successful business, do not let your pending divorce put your accomplishments at risk. Your spouse may be entitled to an interest in your company and a portion of its assets and profits. Following are ten tips for effectively protecting your business from the damaging effects of dissolution:
1. Rely on your prenuptial agreement — Seek enforcement of the prenuptial agreement you signed before your marriage
2. Negotiate a postnuptial agreement — A valid post-nuptial agreement can protect your business assets, often in exchange for other property — for example that you agree to each keep your own companies intact and separate from marital assets
3. Create a trust — Instead of you owning the business, draft a trust that owns the business and all its assets
4. Enter a buy-sell agreement with your partners — A good business practice at any rate, a buy-sell contract establishes terms for handling each partners’ shares in cases of partnership division or the death or divorce of one of the owners
5. Do not comingle family and business property — Keep your family finances completely separate from your business assets to clearly delineate the property that belongs to each
6. Avoid starving your family to feed your business — A spouse who made financial sacrifices to start or grow your business has a right to a return on the investment that contributed to its success
7. Maintain precise business accounting records —Through meticulous accounting practices, you can demonstrate which assets belong to the business or the marriage
8. Review your business practices — Your choices of accounting method, corporate formation, contractual arrangements, debt reduction and reinvestment can affect the reported value of your business
9. Reduce your spouse’s sweat equity — A spouse who is actively involved in your business can claim responsibility for its financial success
10. Negotiate for your intact business — Demand 100 percent of your business in return for other marital assets
