When divorce comes knocking for New Yorkers, it has the potential to devastate small business owners whose businesses are not protected from their marriages. If you own a business and did not protect yourself and your business with a prenuptial agreement, you may have to make some very difficult choices in the coming weeks and months if you hope to keep the business intact through the dissolution of your marriage.
Each divorce is different, and requires a different approach. Strategies that work for one business owner may not work as well for another. The good news is that saving the business is possible. However, there are no guarantees, and you must identify your priorities and begin building a strong legal strategy as soon as possible.
First, you must determine if saving your business is truly a priority that makes sense. If the business is already failing, or if you believe that sacrificing other assets to save it will leave you unable to keep the lights on, then you may need to face the hard truth that saving your business is not wise, even if it is possible.
Of course, for many business owners, their business is not simply about them. They have their employees, suppliers, and customer base, all of whom will directly experience loss if a divorce sinks the business.
If you believe that saving the business is the right move for you, then you need to get experienced legal guidance immediately. The next few steps you take will set the tone for the rest of your divorce, and it is crucial to make these choices carefully and confidently.
Prioritize and commit to the plan
Depending on the nature of your relationship with your spouse, it is possible that he or she will willingly sign a postnuptial agreement protecting your business from the divorce negotiations. Of course, this does not work in many cases, and making this request of an angry spouse may only make things worse. You need to consult with your attorney before deciding if this is the right course of action for you.
If a postnuptial agreement is not possible, then you need to act quickly and decisively to ensure that your business matters and family life are as distinctly separate as possible. This entails keeping your accounts impeccably, and making sure that there is no back-and-forth between your personal and business finances.
The more you commingle your assets between your family finances and your business finances, the more difficult it is to demonstrate that they are separate. Plainly speaking, do not spend your personal money on the business, and do not use business resources for personal matters.
If your spouse has any official involvement in the business, it must end. If necessary, you may need to fire your spouse from a position he or she holds in the business.
Once your family and business matters are as separate as possible, you should probably consider a business valuation. A professional business valuation helps you know exactly what your business is worth.
Negotiate with a purpose
Once you know exactly how much your business is worth, you can more accurately negotiate to keep it intact. Until you have this information, it is much easier for your spouse to claim that the business is worth much more than it truly is.
With proper legal guidance, you can now approach your divorce negotiation with all the available information and leverage.
The truth of the matter is that you may have to sacrifice other valuable assets to keep you spouse from claiming a portion of the value of the business, which may sink it.
Your attorney will help you make these negotiations carefully, ensuring that you only offer as much as you need to keep the business whole. Often, business owners offer spouses other assets to maintain the business, like real estate, investments, savings and retirement accounts.
With the guidance of an experienced attorney, you can create a professional, aggressive plan to save your business and weather your divorce, ensuring that your rights remain secure in the process.
Source: Nov. 30, -0001