In Louisiana and across the country, nearly one in two marriages is ending in divorce. Thus, the distribution of assets has become a challenging ordeal for more people. When a business is involved, the situation gets more complicated. When you are a CEO, board member or shareholder, you can take several steps to ensure that your earnings are not disrupted in case of a divorce.
What are the impacts?
The divorce process is often messy. Apart from negotiating the children’s custody, the financial implications can be daunting. Everything in your name might be claimed by your spouse since it’s marital property. Marital property is all assets acquired by both spouses during the marriage. Additionally, divorce drains your emotions. You will likely shift your attention from your daily errands to focus on the divorce. Your company might be in jeopardy from the toll placed on you.
How to protect your business
Protecting your business is among the savvy decisions you need to make before marriage. Before the wedding, both partners are hopeful that the marriage will last forever; no partner wants to face the fact that a divorce could happen. However, having a prenuptial or a postnuptial agreement with your partner defines what happens to the business in case of a divorce. You need to consider whether the company is part of the marital property. To do so, a prenuptial or postnuptial agreement is recommended.
Put the business in a trust
Once the business is in a trust, you don’t own it. Thus, in case of a divorce, the business will not be part of the settlement. However, states have laws against the fraudulent transfer of assets. The state may consider the transfer null when you transfer the business just before the divorce.
Separate the finances
When investing, separate your investments from your business. Separating the assets reduces confusion on the ownership of the business.
When divorce happens, your business could be dragged to the settlement. If you are planning on a divorce, you may want to consult an attorney on how to protect your company.