It can be highly satisfying to see your business grow from just a seed of an idea to a flourishing and profitable enterprise. In fact, if you own a business in Colorado, it may be one of your most valuable assets. Therefore, if you are planning on marrying, before you and your partner walk down the aisle, you may want to consider taking steps to protect your business.
For example, you and your partner may want to execute a prenuptial agreement. Through a prenup, a person can designate their business as separate property. If done properly, should the couple divorce, the business owner's ex will not be entitled to a share in the business.
Whether or not you execute a prenup, if you own a business while married that you'd like to remain separate property, make sure to pay yourself a competitive salary. Why? If you constantly reinvest all the business's profits back into the enterprise itself, your ex may be able to argue that they should receive a larger amount of the business's value, since they didn't gain any benefit from the business, as all its funds went back into itself, rather than the shared household.
Also, sometimes it's best not to employ your spouse in your business. Doing so might change it from separate property to marital property. And, the more involvement your spouse has in the business, the greater share they might be eligible to receive should you divorce.
Finally, if, in the end, your spouse is entitled to a share in the business, it might be possible to pay your spouse off. For example, you could keep the business and use your share of other marital property, such as retirement funds, cash or other means to pay off your spouse. Or, you might consider a property settlement note, in which you make payments with interest over the long-term to your spouse in exchange for their portion of the business.
In the end, there are things you can do prior to marrying, while married and in the divorce process to protect and keep your business. However, this post cannot provide legal advice for any one person's situation. Therefore, business owners who want more information on high asset divorce are encouraged to discuss the matter with their attorneys.
Source: Inc., "How to Protect Your Business in a Divorce," Jeff Landers, May 25, 2010
Tags: High Asset Divorce
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