Although you may be a successful entrepreneur with a flourishing professional life and a healthy business, not everyone is quite so lucky in their home lives. Statistics show that between 40 and 50 per cent of marriages in the United States end in divorce. It is undoubtedly an emotional and distressing period of your life, and it can be complicated by the anxiety over what can happen to your business during this process.
Business that were owned prior to a marriage may be impacted less, especially if you are your partner agreed to write a watertight prenuptial agreement beforehand with the help of your lawyers. If it is considered to be marital property though (a business established while you were married) it will be seen as an asset just like any other. As such, it can be divided between you and your spouse in the event of a divorce no differently than furniture, vehicles or other household property might. A well-publicized example of this occurred in the United Kingdom in the case of Lambert V Lambert. Entrepreneur Harry Lambert split from his wife after 25 years of marriage and was forced to give £7.5 million from his £20 million newspaper business to her.
These kinds of stories will strike fear into any men or women who own successful businesses and are either being divorced or seriously considering filing for one. It can stagger your financial growth, undermine your company’s success or hinder plans for expansion in the future. However, there are steps that business owners can take to ensure their company is protected as best as possible in the event of a separation. While it won’t guarantee that you keep all of your money, it can shield you from being hit as hard as you normally might. Even if you feel you are in a stable relationship, they are actions worth taking. It may sound cynical, but you don’t want to regret not taking the opportunity to do it earlier if a marriage does eventually dissolve. There is nothing unusual about preparing for the worst case scenario.
It may sound like common sense but if your partner has a position or title within the business, he or she should be removed as swiftly as possible. The longer they play a role in your company, the higher their stake in its finances is going to be. Another ne of these steps you can take is to ensure you are not mixing your personal and business assets. This will hinder any attempts to separate them during a divorce proceeding. Business owners may, furthermore, decide that it is a good idea to jointly own the company with shareholders or partners prior to a divorce. Meanwhile, if your business is fully in your ownership it will be treated no differently to any other asset and separated between you and your partner. This could change if you are sharing ownership with partners and shareholders. Their needs must then be taken into consideration.
The most important step to take before you even consider any of this is to instruct the services of a specialised divorce solicitor. Versed in the law and experienced in cases like this, they will be able to offer you the best advice for your particular set of circumstances. Their services are also essential because if you are seen to be deliberately moving shareholdings or assets to avoid any claims by a partner, your case could be profoundly impacted. A divorce lawyer will be able to give you careful and considered advice so that you are not acting dishonestly; you are just protecting the wealth you feel you are entitled to.