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6 Ways to protect your business during divorce

During divorce, you split all marital assets in a fair manner. Even if your spouse has never been involved in your business, the business still counts as a joint marital asset in the eyes of the law. Before and during divorce, there are steps you can take to keep you in control of your business assets. Here are six ways to safeguard your business: 

  1. Pay yourself a good salary
    When you get into the habit of paying yourself what you are worth, rather than subsisting on the minimum while sinking profits back into the business, you reduce the odds that a judge will find in favor of awarding your spouse a stake in the business. 
  2. Keep the family finances separate
    Keep all business funds separate from the family finances. You don't want attorneys sifting through financial documents only to find that you spent family money on business travel or technology, for example.
  3. Get your spouse out of the business
    If your spouse works for the business, their lawyer can argue they deserve a greater share of business assets. When the marriage becomes tumultuous, get your spouse out of the business as quickly as possible to protect your assets and keep things running smoothly.
  4. Trade assets to keep the business yours
    You may be able to retain all of the business assets by giving your spouse something else they want. Ask yourself if you are willing to give up the car or the vacation home to retain 100 percent of business assets.
  5. Have the business appraised before divorce proceedings
    When you head to court, have the business appraised by a neutral third-party. Often, people close to a business assume a higher projection of value for their business due to sentimental reasons. With a fair appraisal, both sides can talk about the business valuation in real terms.
  6. Buy out your spouse
    In the event a judge awards your spouse a share of the business, buy them out. You might raise capital from angel investors or take out a business loan to do so.

The best time to set up these business protections is during happy times in your marriage. Once divorce becomes a possibility, try to move quickly to safeguard your business before you or your spouse files for divorce. If you are getting divorced, then you need an attorney who understands how to protect your best interests in your personal life and in business. The law firm of Philip A. Greenberg, P.C., Attorneys at Law, has extensive experience representing clients who have business assets.

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