Divorce and legal separation is already a stressful experience and having a business spanning your marital assets can quickly add unique challenges. The last thing you want is to lose the business you worked so hard to create. There are a few things that can be done to protect your business such as:
Using prenuptial and postnuptial agreements: A prenuptial agreement is a legally binding contract created before a couple marries to address such issues as property rights. Similar in outcome but different in timing, a postnuptial agreement is one that occurs after a couple is married. Although it does not sound the most ideal romantically, it sets financial expectations and responsibilities for each spouse. Agreements routinely list what each person brings to a marriage. This will include what each party owns (all their assets) and what each owes (liabilities). The agreement will explain what happens to the party’s assets and liabilities upon separation, divorce or death. Property and debts acquired during the marriage may also be included in the agreement as well as what will happen to it at separation, divorce or death.
Forming a partnership, shareholder, and/or operating agreements like those found in a corporation or LLC:
Turning your small business into a partnership, shareholder, and/or operating agreement like a corporation or LLC could protect its assets by creating a separate legal entity that would hold ownership of company assets during a divorce. It is essentially the property of the third party and therefore will not be considered marital property during a divorce. However, it is important to keep in mind that any marital assets used to fund company expenses are able to be extracted or used to determine whether the company is marital property or not.
If you need help with your contested or uncontested divorce, contact Thorsteinson Law Group, your trusted and experienced Long Beach and Huntington Beach divorce attorney.