Whether you are single, happily married or in a rocky relationship, the time is now to protect your business assets from a future divorce. Planning now can actually help your relationship, as you have already taken care of a major financial concern. You can put more focus on protecting your marriage knowing you have already protected your business.
Otherwise, you are left to Massachusetts property division laws, and your spouse may have claim to some of the increased value of your company. Follow these tips from Entrepreneur to ensure your business is divorce proof.
Prenups and postnups
When you are considering marriage, create a prenuptial agreement with your fiance. This document will outline what is community and separate property and what will happen to assets in the event of marital dissolution. If you are already married or acquired your business after marriage, you can sign a postnuptial agreement instead. The law treats it a little differently than a prenup, so it is wise to have a business or family law attorney help you draft the agreement to ensure its validity.
Buy-sell agreements and trusts
A buy-sell agreement is another way to determine the future of the business and its profits should you divorce. You can put limitations on your spouse or include ways to buy out your spouse’s share if applicable. A second option is to transfer the company to a trust so you are no longer the owner, excluding it from eligibility for property division.
No spousal involvement
Sometimes couples start businesses together, or one spouse will include the other in operations upon marriage. However, if the company is solely yours, the best way to keep it that way is to prevent your spouse from having any involvement in the company. Any contribution your spouse makes to the business can allow him or her to have claim of that portion of value.
Taking these steps now can make a divorce easier and less contentious. If you are already in the midst of a breakup, you can still take some protective measures.