Protecting Your Family Business During Divorce

If you are part of a family business, the threat of losing control as the result of a #divorce is a very real phenomenon. And with divorce rates still high, the reality is that you are nearly as likely to go through a divorce as not. So what steps can you take to protect this important asset when you decide to say “I do?”

Start with a Prenup

While not glamorous and often a source of tension between partners before marriage, this is a key component for any business owner who started the business before the union. When done properly, an iron clad prenup can save you from the disaster of losing some (or all) of your business in the event of divorce.

A Buy-Sell Agreement

If a prenup is not possible, executing a pre-wedding buy-sell agreement (one that spells out the rules of engagement in the event of a split) can also keep your business under your control.

A Trust

If generational wealth is part of your reality, it makes sense to put assets in trust to protect them in the event of a split. This also protects the trust beneficiaries from losing their assets in the event they end up divorced.

Buy Out Your Ex

If your soon-to-be-ex owns part of the business, consider buying out his or her share of the business. This may require a loan or property settlement note, but it sound advice if your business looks viabile for the long term.

Stay Together (in a business sense)

If acrimony is not part of your divorce and no other solution is possible, it may make the most sense to simply carry on operating the business together after the divorce. While not ideal for many couples, this is sometimes the only short-term solution when other options are not on the table.

Going through a divorce can lead to financial uncertainty and concern. Visit our website to learn how a Divorce Transitional Support Advisor can help you or your client regain financial stability after a divorce.