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Business owners must approach divorce with extra caution

When a couple decides it is time to file for divorce, the process can seem daunting — particularly for those who have complicated assets. While the law makes it relatively simple to get married, getting divorced is a much more complex process. Courts require spouses to divide their assets and liabilities equitably in order to settle a divorce, and this process is often where conflicts emerge.

If you face divorce as a business owner, it is important to understand how the divorce process may affect the business. If your spouse co-owns the business or helps operate it, they may have a claim to a portion of its value as part of your marital property. In order to protect your rights and your business throughout the divorce process, you must create a strong legal strategy to keep them secure.

Is your business protected?

Apart from child custody issues, property division is often the most difficult portion of divorce to navigate, especially if a couple owns complex assets such as real estate or a business. A business is an asset, just like a car or a savings account, and in many instances it may qualify as marital property a divorcing couple must divide. If you own a business and it is not protected as personal property, it is crucial to plan carefully around this as you move forward.

If you have a prenuptial agreement, begin by reviewing the document carefully to identify any protections your business may have. If you protected your business as personal property under the prenuptial agreement, then you may not need to involve it your property division. However, if it is not protected, or if you do not have a prenuptial agreement, you may have some difficult decisions ahead.

Depending on the size of the business and its value, you may or may not wish to keep it intact through your divorce. It is much different to consider the impact divorce may have on a business with several employees and a large customer base than a small side-venture you operate in your spare time.

If your spouse does have a strong claim to a portion of the business's value, then you may need to dissolve or sell the business to compensate them, or compensate them with other equitable assets. In most cases, determining how much a business is worth is an important step in the process, so that divorcing spouses can negotiate based on the business's real value. Third-party business valuation is an excellent tool you can use to understand precisely how much the business is worth, including its liabilities, so that you can avoid unfair negotiation and other frustrations.

Protect yourself to rebuild stronger

Whether your divorce involves your business or not, divorce is an opportunity to refocus your attention and realign your priorities for the future. By crafting your legal strategy carefully, you can keep your priorities secure throughout the divorce process and ensure that you have the tools and resources to land on your feet and rebuild stronger on the other side of a difficult season of life.

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