Marriage can be as exciting as it can be difficult. While some couples can mend fences and continue, others face hardships that become to difficult to overcome and choose to divorce.
For business owners who choose to get divorced, the company only adds to assets that need protection. Some initial questions to ask yourself include:
- Is your company separate or marital property?
- Does your state follow equitable distribution or community property guidelines to divide property during a divorce?
- New Hampshire is an equitable distribution state, which means that if the divorce reaches litigation, the judge will determine how property is divided based upon each case’s unique circumstances.
- Did you have your spouse sign a prenuptial or postnuptial agreement stating that you are the sole owner of the company, or that your nontiled spouse is entitled to, as an example, 6% of the business’s total value upon divorce?
If you and your spouse have not agreed to a pre or postnuptial agreement, and believe a divorce is imminent in the following weeks or months, begin taking steps toward safeguarding your company’s assets.
- Hire an accountant: You may do your books, but to make sure everything is on order, hire a professional to take over (at least until the divorce is settled).
- Make sure your personal and business accounts are separate.
- Financial matters during a divorce only become more complicated when your personal and business transactions are intertwined. A business lawyer may have a keen knowledge of this subject if you haven’t separated your accounts.
- Separate you and your spouse’s financial accounts (including credit cards) as much as possible.
- Gather all your financial documents: From tax returns to mortgage statements to bank and investment statements. The more information at your disposal, the better.
- Hire a divorce lawyer with knowledge of how to protect your business.
- If your spouse works at your company, begin to ease them out.
- The longer your spouse works with you, the more they may be legally entitled to a share of the company
- Be willing to compromise other assets (home, vacation home, vehicles, retirement accounts, stock options) to retain ownership of your company.
- Get your company valued by a neutral third party.
- The court will appoint someone to calculate your company’s total value but get a neutral second opinion. The court-appointed professional could value the company at its estimated value five years from now instead of its current value.
The main takeaway is the importance of preparation for every circumstance. A seasoned family law attorney will provide guidance and do their best to assist you, but you must take ownership as well.