How to Protect Your Business in a Divorce
Do you own a business? If you’ve worked hard to build your company, the last thing you want is to lose ownership to your ex-spouse. Fortunately, our divorce attorney can help protect your company as much as possible during separation so you don’t lose your marriage and livelihood at the same time.
Continue reading to learn how our divorce lawyer can help you protect your business in a divorce. Contact our office today if you have any additional questions or concerns regardings your divorce case.
Protecting Your Business During Divorce
Divorce Proof Your Business
Our divorce lawyer recommends keeping your company and household finances separate. We also recommend easing your spouse out of the company so they can’t claim as much involvement.
Our list of tips for how to divorce proof your business:
- Fire your spouse or ease them out of the company.
- Keep family and business finances separate.
- Give yourself a fair salary.
- Get an appraisal of your company from a neutral outside party.
- Give up other assets in exchange for business ownership.
Will I be forced to sell my company?
It’s unlikely that the court would force you to sell your company because it would cut off future income needed to pay child support and alimony. However, this doesn’t mean you should let your guard down. If your company is considered a marital asset, it’ll have to be properly divided between you and your ex-spouse.
Is a business considered marital property?
When you started your business will determine whether it’s considered a marital asset. In the state of Michigan, marital assets must be valued and properly divided.
Companies Started Before Marriage
Companies you started before getting married have a better chance of remaining untouched in a divorce. However, the court may decide otherwise if they see your ex-spouse greatly contributed to the company during the marriage. The court may also see the company’s increased value over the course of your marriage as a marital asset.
Companies Started During Marriage
Companies you started during marriage are considered marital assets. The court will award the company to the person who plays the most active role. If you’re awarded the company, you’d then have to pay 50% of the company’s net value to your ex-spouse.
Our divorce attorney can help you determine whether you’d like to make payments over several years or give up a different asset in lieu of payment. For example, you may give your ex-spouse the retirement accounts in exchange for 100% control of the business.
Did you inherit a company? An inherited company may need to be divided during a divorce depending on the number of years you were married, the donor’s wishes, and whether the company commingled with other marital assets.
The longer you’ve been married, the more likely your company has grown in value or commingled with other marital assets. In these situations, the judge would determine your inherited company is a marital asset that needs to be properly divided.
How can I protect my business without a prenup?
If you plan on filing for divorce, call our divorce attorney as soon as possible and consider our tips below.
Fire Your Spouse
It may sound brutal, but firing your spouse reduces their claim on your company. If you have time before you know you’ll be filing for divorce, ease them out of the business as soon as possible. The more involved your spouse is in the business, the more likely their attorney will argue their client deserves a cut of the profits. A judge might agree.
Keep Family and Business Finances Separate
Keep your family and company finances separate. For example, don’t dip into the household account you share with your spouse to invest in new company equipment. Otherwise, it’ll be easy for your ex-spouse to argue that they have a claim to your business. Our divorce lawyer can help you prove your business didn’t touch shared family accounts.
Give Yourself a Fair Salary
Your ex-spouse may be entitled to the company’s assets if you withheld money from your household to grow the business. You can easily avoid this situation by paying yourself a good salary.
Get an Appraisal from a Neutral Outside Party
Don’t agree to an appraisal until it’s been reviewed by a neutral outside party. If your company is marital property, its appraised value will affect how much you have to pay your ex-spouse for their share.
Give Up Other Assets
In the state of Michigan, marital assets have to be valued and divided properly. If you don’t want to relinquish control of your business, we may recommend giving up other assets in its place. For example, you may choose to give up the house in exchange for keeping 100% ownership of the business.
Our divorce attorney can help you protect your business in the event of a divorce. To request a consultation with our divorce lawyer in Grand Rapids and Kalamazoo, call the Law Offices of Sean Patrick Cox today.