Divorce is a difficult process, and couples are often unable to agree on how to handle marital property. This is particularly true for couples where one or both parties own a small business. If you own and operate a California company, one of your primary goals is to keep your business intact and ensure its continued operations.
Business owners often find significant benefit in protecting their interests by drafting a prenuptial agreement before they walk down the aisle. This is a smart step, but not everyone chooses this path. Whether you are preparing to marry or you already married but want to protect your company, these are steps you can take to accomplish those goals.
Considerations for your prenup
In its most basic form, a prenuptial agreement outlines how property division will work in case the marriage ends in divorce. For business owners, this is particularly useful. Before you marry, you specify your business as separate property, which will protect it in case of a divorce in the future.
You can also specifically outline how much your spouse will get for the added value to your business, which is likely marital property, after the date of marriage. This will eliminate the need to fight over how much the other party should receive in the settlement.
What if you do not have a contract?
If you do not have a prenuptial agreement, it is still possible to plan for a divorce at any point in the future. One of the things you can do is to look at your organizational documents and ensure they list you as the owner of the company. Another important step is to keep careful track of where all money came from to start, run and operate your company.
Another important step you can take is to keep the expenses related to your business separate from your other personal expenses. Keeping clear financial records will make it easier in case there is a dispute over business assets in a divorce.
Your legal options, explained
It is in your interests and for the benefit of your small business to learn about the legal protections you can secure either before or after marriage. A complete assessment of your situation and explanation of the options available to you can help you move forward with the most appropriate choices. You worked hard to build your business, and it is prudent to work hard to protect it as well.
