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How To Protect Your Business In A Divorce


From the emotional point of view, many times couples never think that a time would come to consider divorce. When you have significant investments, beautiful kids and all of a sudden disagreements start popping in, marriages get shaken, and one of the partners may feel it’s time to call it quits.

Research has proved that when couples are in love, have great plans for their marriage, and finances, they rarely debate on issues like divorce. This is because it is just like an accident which is an unexpected event in life. Truth be said, in the event of a divorce, your assets are high risk, and it is worth to consider on how to protect assets in a divorce.

When you have a business, at times it expands to a level when you have to accommodate your partner to play a role as you progress. By accommodating him or her, it means that they are part and parcel of the business and they hold shares in the business. Besides all the secrets are disclosed to them because of trust when incorporating them.

However, it is good to note that as time moves and the marriage start to shake, if care is not taken, the business is bound to fail too. In case your partner files a divorce, then it is high time you need to wake up and act to protect the business.

Below are some tips that can help to protect your business from divorce.

1. Fire your Spouse from the business.

It is essential to assess the extent to which your spouse is involved in a business. Whenever he is not engaged in the business, then, there will be reduced claim of the business value during the division of the assets.

It is, therefore, best if your partner is not an employee and should also not have a chance in contributing to the critical business decisions.

By doing so, it will help even the courts to determine his worth in the business if at all he is not a business partner.

It’s essential then to consider documenting the lack of involvement statement of your spouse in the business. The stronger the spouse is in the business, the lawyer will also be able to produce a vigorous defense of how the spouse helped to build the business wealth and win high-profit margins. 

2. Sacrifice Family Assets.

According to inc.com, when the divorce settlement is being carried out, work out towards retaining as much as 100 percent ownership of the business. This can be done by releasing as much family property as possible to your spouse and remaining with the overall shareholding in the business.

Forfeiting family property during divorce will help you to build further on the business and will help you to purchase other assets later. Assets such as vehicles, accounts, are worth to let go as you also focus on your business for your well-being.

3. Hire a neutral Valuation Professional.

At times when couples are in the process of divorce, there are issues that they consider to agree together to minimize conflict. Amongst them are valuation by agreement which often brings conflicts.

To avoid future conflicts, it is better if the couples get a third party professional who can value the business assets based on the projected growth. This typically becomes an eye-opener to the judges in determining how much each person is worth getting and how much you can consider paying your ex to take back the business and operate it as a whole.

The court will at such a point be able to make a fair justice towards the divorce settlement without finding that one of the couples was favored in one way or another.

4. Buying your Ex-spouses shares.

It may sound awkward on how you can approach your spouse to buy shares from him /her. But after the business has been valued and all the costs are undertaken, it is vital that you consider buying the shares. Though this may seem like it is a whole lot of money, there are always ways that you can work out and pay your spouse.

Selling Shares to the employees – whenever a business has signs of growth, even the employees would want to be associated with such, and you may decide to sell part of the shares to your employees and settle your ex.

Angel Investors – An angel investor is a person or investors who would be willing to give you cash to sort out such an issue with an interest of getting back the money with interest. By this time you need to have a plan with your bank to get a loan which you could settle back to the angel investors and move on with your business while your spouse is no longer attached to it. 

5. Pay yourself a salary you are worth receiving.

Many are the times that entrepreneurs keep pumping back the money into the business with the hope of seeing the business grow from one level to another. However, you need to consider such eventualities as divorce whereby if your business partner is getting a divorce, he/ she may end up being given a more significant share and especially if he was fully involved in the business. If you don’t pay yourself well, then you will be on the losing end considering that you may lose all the business and its property.

Always pay yourself and make personal investments which will be there to help you even in your retirement. 

6. Keep good business records.

Maintaining business records is a crucial factor in that you will at all times be in a position to know at what point the business is growing. If you do so, your spouse may not know the valuation of the business and may not be in a position to file high requirements for the business requests as opposed to when you were utterly blank about the business trends.

The other point is that you should keep business and family affairs apart. Do not borrow from the family kitty any money as this will bring conflicts in the business. Your spouse will also have a free hand on information that relates to the business operations, and he/ she will take advantage during the divorce settlement.

7. Trade your shares.

According to fidelity.com, when going through a divorce, it’s worth considering to trade your shares for equity in the business you are running. This is because, during divorce and business ownership claims, the assets that you have traded in will help you in one way or another to maintain your share in the business and will leave the business intact.

As we had discussed earlier that you could sacrifice your assets to your ex as you seek to retain the ownership of the business, there are those assets that your ex may not be planning to take up.

Such assets can be traded in for equity in the business, and no one will have a chance to claim them later. 

8. Have a pre-nuptial agreement.

It’s always proper to have an agreement relating to your business if the business was still in operation before you got married.

The business will specify the rights and obligations of each partner, and in case of divorce, there will be a piece of extensive information on the division of the business in a divorce.

If you are married and the business started while you were still together, it is essential to seek legal redress on how you will be able to divide the business should divorce take a tall order.

Making prior plans even when you are not planning to divorce is an important aspect. And this will help a couple to settle peacefully and be able to agree on the way forward when divorce happens to take place. 


A divorce is an ugly event that no one wishes to go through, but since it happens to form part of our day to day lives, it is worth considering to plan for it as you think of the future wellbeing of your children. If you do not plan on the course of actions that you would need to take in case of divorce, your business may be the source of income that supports your children’s education, then they will be profoundly affected both financially, academically and their self-esteem will go low.

Therefore, couples will need to have a call for action in case of divorce and come up with ideas of how to tackle issues on how to protect assets before divorce.



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