Many Pennsylvania residents are the proud owners of their own businesses. Whether you started your business before or after walking down the aisle, there are things that you can do to protect your company from the ravages of divorce -- if that ever enters the picture.
No one wants to see their business fail. However, some may not realize that, if they get divorced, their companies may end up being their biggest marital asset. Wondering how you can protect your business from going to your spouse? Keep reading.
Keep it separate
In any marriage, there is separate and marital property. Separate property is anything you bring into the marriage. It will remain yours unless you and your spouse co-mingle assets. If you want to keep your business to yourself, keep it separate. Wondering how?
- Give yourself a salary
- Do no reinvest your salary into the business
- Do not let your spouse work for you
By doing these things, your spouse will have no real claim to the company in the event of divorce.
Prenuptial or postnuptial agreements
Those who are worried that just keeping things separate will not be enough to protect their businesses from division in divorce can have prenuptial or postnuptial agreements created. Those who go this route will want to be sure that the agreements are in writing and signed in front of witnesses. Your spouse must sign voluntarily. Finally, the agreement must be fair for both parties.
What if my business ends up being marital property?
If you did not take the necessary precautions to keep your business separate property, and it is subject to division in your divorce, you and your spouse will have to decide the best way to proceed. If you want to keep the business, and your spouse wants nothing to do with it, you have two options: sell and split the proceeds, or buy out your spouse. If your spouse wants to stay involved, you will both have to decide if you can work together despite the status of your relationship.
Do not wait
No one expects their marriage to end in divorce. Unfortunately, it happens. Business owners should not wait until it is too late to protect their businesses from being subject to property division. The sooner one puts protections in place, the better off one will be if divorce ever enters the picture.