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3 ways you can protect your business when you file for divorce

On Behalf of | Nov 19, 2021 | Divorce

Thinking about a divorce may make you feel nervous or vulnerable. Individuals with significant assets are often particularly concerned about what divorce will mean for their financial future. Houses, retirement funds and businesses are all assets that can lead to major disputes in a divorce.

A business requires not just time and financial investment but also long-term planning. It can be hard to know what will happen with your company if you believe your marriage will soon end. You may worry about losing your ownership rights.

There are ways for business owners to protect their financial interests when considering a divorce in California. Any of the three strategies below could help a business owner make the outcome of their divorce less risky for the business.

Show that the business is your separate property

California is a community property state, which means that your spouse can claim the value of most of the assets you obtained during your marriage. However, some of your property is exempt from property division because it is your separate property.

If you already owned the business at the time of your marriage or if you inherited the company or purchased it with inherited resources, your financial records could help you establish that the company is your separate property not subject to division in the divorce.

Create a postnuptial agreement with your spouse

People often worry about divorce while going through difficult times in their marriages. You and your spouse could potentially create an agreement that helps you address your current marital issues and preemptively plan for a future divorce.

A postnuptial agreement could make certain assets your separate property, including your business. It could also help the two of you discuss matters and possibly work things out with one another. If you do divorce, the postnuptial agreement allows you to file a straightforward uncontested divorce because you have already reached an agreement about how to split your property.

Negotiate a settlement outside of court

If the business is definitely part of the marital estate and you don’t want to draft a postnuptial agreement because divorce is the only solution to your marital issues, you can still settle with your spouse outside of court.

Through collaboration between your attorneys or even mediation, you can reach a property settlement agreement outside of court that protects your interest in the business while also giving your spouse a fair share of the marital estate. Thinking about different approaches to divorce can help you protect your business assets.

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