How To Protect Your Business And Wealth Ahead Of A Divorce
Building wealth as a business owner is not easy. It takes years of painstaking effort to start your business and grow it long enough to be counted as a high-profile individual. One thing that can completely change the financial status of your business is a divorce. When you suddenly separate from your partner, all your assets, including your business, will be at risk. In this piece, we will show you how you can protect your assets in the event of a divorce.
Before The Marriage
If you’ve accumulated a lot of wealth as a single person, the first step for protecting this wealth is with a prenuptial agreement. A high-asset divorce attorney will draft out a reasonable prenuptial agreement that protects your interests in the event of a divorce. Usually, such an agreement will clarify business ownership and control. They will also help you to establish individual property designations and take account of possible settlements in the event of a divorce.
After The Marriage
While a prenuptial agreement protects the wealth you accumulate before the marriage, a postnuptial agreement allows you to gain some form of protection mid-marriage. If you didn’t have a prenup before the marriage and you suddenly come into some wealth after the marriage, you can opt for this adjustment. It allows you to reclassify your marital property as separate property. A postnuptial agreement also helps clarify financial responsibilities between you and your spouse during the marriage.
Choosing A Business Structure
Another factor that influences how much of your business you will lose in the event of a divorce is the business structure. You need to design your company in a way that minimizes exposure as significantly as possible. The three most common business structures in the United States are LLCs, Corporations, and partnerships. When you opt for an LLC, there is usually a clear establishment of ownership and management roles in the firm. If you decide to open a corporation, make sure your business shares are held in a trust or by a separate entity. For partnerships, make sure there are legally binding documents that define the scope of the agreement.
Opt For Asset Protection
You may trust your partner with all your heart, but you can never predict the future. If the marriage should come to an end, your partner may want to milk you for every penny you’ve got. As a high-net-worth individual, you have too much to lose to simply leave everything to chance. Consider opting for asset protection methods like offshore accounts, trusts, and gifting. Keep in mind that you will need an international business structure to legally keep the bulk of your business funds in an international account.
During The Divorce
When the inevitable happens, and you have no choice but to end the marriage, you need to hire a renowned divorce lawyer to protect your interests. Your divorce lawyer will help identify areas of potential dispute and develop an effective settlement strategy. It will also help if you do an independent appraisal to get the actual value of your business assets.
Conclusion
A divorce is already an emotionally draining experience. It doesn’t have to be financially draining, as well. By following the steps above, you will protect your business when your marriage ends.
