For business owners, divorce involves an added layer of complexity. They may wonder if the court will divide their company and whether this will mean the end of the business they have built. What steps can you take to protect your business as your marriage ends?
1. Determine whether your business is marital property.
Ohio is an equitable distribution state, which means that the court divides marital property equitably or fairly in divorce. Establish whether your business qualifies as marital property, which generally includes assets acquired by either spouse during the marriage. Even if you started your business before your marriage, however, the increase in its value during your marriage may fall into this category.
2. Understand the value of the company.
Accurately determining the value of your business is critical. Hire a professional business appraiser to get a clear picture of what your business is worth. This valuation will play a significant role in negotiations.
3. If you have them, review the terms of your prenuptial agreement.
Prenuptial agreements – or their postnuptial agreements, which couples create during their marriage – can be a powerful tool for protecting your business. If you have an existing agreement with your spouse, review its terms. These agreements can provide a clear and agreed-upon path for how you will handle your business in divorce.
4. Document everything.
Keep meticulous records of all financial transactions, business decisions and changes in business operations. This documentation can be a key aspect of assessing your business’s value in a divorce. This documentation can also show whether your spouse was involved in the business and can help you clearly separate your personal finances from the finances of your company.
5. Understand your options.
Generally, business owners have a few options if their business is marital property. These include:
- Buyout: One spouse buys the other’s interest in the business, either with cash or by trading other marital assets of equivalent value. This allows one spouse to continue as the sole owner of the company.
- Sell the business: If neither spouse can buy the other out or if both want to pursue other interests, they may sell the company and divide the proceeds. This can offer business owners the funds to pursue new opportunities.
- Co-ownership: Both spouses may continue to own the business together post-divorce. This requires a high level of trust and cooperation as well as clear guidelines for future operations, but may be an option for some couples who have run a business together.
6. Keep your priorities in mind when negotiating a settlement.
If you want to retain full control of your business and continue its operations, keep that goal in mind when negotiating with your spouse. You might be able to offer other assets in exchange for keeping your business intact.
7. Work with professionals.
Navigating a divorce as a business owner in Ohio can be complex. Thankfully, having experienced professionals on your side can make a difference. For example, a forensic accountant can analyze complex financial situations and untangle your business and personal assets. A divorce attorney, on the other hand, can help you create sound strategies that protect your interests.
Divorce can impact your business, but with careful planning and professional guidance, you can mitigate many of the risks when dividing your property. By taking these steps, you can help ensure that your business remains viable and vibrant, even through personal changes.
