Protect your company in a divorce

On behalf of Johnson, Sclafani & Moriarty, Attorneys at Law posted in High Asset Divorce on Friday, December 16, 2016.

If you are a business owner whose marriage has hit the skids, you’re right to be concerned how a divorce could affect your company. Below are some strategies to minimize damage to your business in a divorce.

— Make sure that you are well-paid by the company. A common mistake is for owners to bring less home in salary in order to keep funneling more capital to grow their businesses. Your spouse can make a claim for his or her share of that business now, however.

— Keep meticulous business records and never commingle household funds with company monies.

— Be open to letting go of other assets like a 401k, collections, cars or even your interest in the family home in order to retain ownership of the business.

— Fire your spouse. If the two of you worked together in your business, plot the exit strategy you will use to sever those ties. Remember that the more entrenched a former spouse appears to be in a business, the easier it is to argue that he or she came in on the ground floor and deserves a hefty chunk of the profits now.

— Make sure that you obtain accurate valuation. Don’t rely on future projections. Markets get glutted, the economy can tank. Nothing is written in stone. The value should reflect today’s revenues only.

— Sell a stake to buy them out. Open up ownership of stock to employees or take on a minority interest partner to buy out your ex.

— Negotiate to make payments to your ex in installments. That way, if something does affect your business’s viability, you won’t be the only one to absorb the hit.

Seek out a family law attorney who has experience dealing with business entities in a divorce to make sure that your interests are well-protected.

Source: Entrepreneur, “How to Divorce-Proof Your Company,” Carol Tice, accessed Dec. 16, 2016