Divorce can turn reasonable people and those around them into the worst versions of themselves, and everything tied to a divorce can suffer if the spouses involved do not carefully consider their legal strategy. The law considers marriage to be similar to a business partnership, and it is much more complicated to undo a marriage than it is to enter into it.
If you are facing divorce and you also own a business, you have some important, potentially difficult decisions to make. Businesses often qualify as marital property during divorce, which means that your spouse may have a valid claim to a portion of your business’s value.
Depending on the strength of the business and the precautions you took to protect it before marriage, you may need to sacrifice other assets and opportunities to keep your business intact until your divorce finalizes.
Protect the business as soon as you can
In most cases, the best protection against divorce for a business is through a prenuptial agreement. When used properly, one spouse can use a prenuptial agreement to specify that a business is separate property, limiting the other spouse’s rights to it in the event of divorce.
If you do not have a prenuptial agreement protecting your business, then you need to decide quickly whether you want to make saving the business a priority. It is possible to do so, but may be costly.
You may claim that the business is not marital property even if there is no prenuptial agreement to that effect, but to do so you must show that your spouse has little or no involvement in the business. The more separation that you demonstrate between your professional and personal lives, the better.
Understand the value at risk
If you must negotiate over the business in your divorce, you want to have a clear understanding of the business’s value. This keeps you from overpaying in a settlement to your spouse, who may claim that it is worth much more than it truly is, leaving you cash poor with fewer options to rebuild your resources.
A third-party business valuation puts all parties on equal footing at the negotiation table, so that you can clearly determine a fair division of assets. With a strong, well-built divorce strategy, you stand a much better chance of keeping your Cherry Hill business intact and making it to the other side of divorce with your rights protected and new opportunities in place.