If you own a small business, getting a divorce can present a distinct threat to its ongoing viability; particularly if you didn’t have a prenuptial agreement, if your spouse worked at or helped build the business or if you mixed your personal and business finances.
Ideally, a small business owner would have put protections into place well before the spectre of divorce loomed, but this isn’t always what happens. So what can you do to maintain control of your small business once a divorce is already in progress?
Try an asset swap. When dividing property, see if you can trade other assets like a home, vehicle or financial account in exchange for the business.
Make payments over time. Just like a car loan or a mortgage, you may be able to pay your spouse for his or her interest in your business by buying out his or her share of the business on an installment plan with interest. This is known as a property settlement note.
It goes without saying that you should not try to hide or understate the value of the business from your soon-to-be-former spouse once a divorce appears inevitable. Forensic accountants are paid to uncover such schemes, which are likely to backfire on you.
You don’t necessarily have to lose your business if your marriage is ending. An experienced family law attorney can evaluate your individual situation and provide you with clarity about how you might best go about preserving what you’ve worked to build.