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4 Ways to Insulate Your Business Interests from a Divorce

Lucere Legal helps protect small business owners from divorce

Considering that the divorce rate in the U.S. is around 50% for first marriages and even higher for second marriages, the impact a divorce could have on the viability of your business should be cause for concern.  The best thing that business owners can do to ensure their companies will not suffer from a divorce – either their own or a business partner’s – is to take preventive measures.  Here are four preventive strategies:

Prenuptial agreement – prenups are becoming ever more popular as people divorce and remarry later in life, after significant assets have already been accumulated.  You should designate your business as separate property in your agreement if it existed before your marriage.  You must disclose the value of all your assets for a prenuptial agreement to be valid, and while it is not required that both parties be represented by an attorney, it is a very good idea.

Postnuptial agreement – these are similar to prenups, but occur after a marriage has already been established.  Unlike prenups, a postnup does require that each party be represented by an attorney. In Minnesota, if a divorce proceeding is started within two years of the postnup signing, the person wanting to enforce the agreement has to establish that the agreement is fair and equitable.

Trusts – using an asset protection trust to protect business assets is a common strategy.  The business is placed in the irrevocable trust and managed by a trustee, so it is considered non-marital property as you technically do not personally own it.

Buy-sell agreement – a buy-sell agreement will specify how an owner’s business interests will be handled in a variety of circumstances, including divorce.  The agreement can be used to prevent spouses from obtaining ownership or voting rights, and it can specify a pre-determined price and payment terms to buy out any ownership rights awarded to a spouse in a divorce.

If you are interested in learning more about business asset protection strategies, call us at (612) 206-3701 or fill out our contact form today to schedule a small business consultation session.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

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