No one ever expects their marriage to end in divorce, but it happens all the time. When a couple splits up, it’s not uncommon to see them taking their anger and frustration out on each other – and this includes business partnerships. If you are the owner of a small business, it is important to take steps to protect your company from divorce.
Draft a prenuptial agreement
This may seem like a cold and unromantic thing to do, but it can actually be very helpful in the event of a divorce. A prenup can stipulate what will happen to your business in the case of a split, and can help prevent one spouse from taking advantage of the other.
Create a trust
A trust is an estate planning tool that can allow you to transfer ownership of the business to someone else, such as a family member or close friend, in the event of a divorce. You can choose an irrevocable trust, which means that the assets in the trust cannot get changed once they are transferred. Alternatively, you can set up a revocable trust, which gives you the flexibility to change the terms of the trust at any time.
Keep your business and personal finances separate
It is also important to keep your business and personal finances separate. This will make it easier to divide your assets in the event of a divorce, and will also help you avoid any potential conflict with your ex-spouse. You can do this by setting up a business bank account and credit card and making sure that all of your business expenses are paid for with these.
No one wants to think about the possibility of their marriage ending in divorce, but it’s important to be prepared. If you own a small business, these are some of the steps you can take to protect it in the event of a divorce.
