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Thoughtful Advice Combined With Strong Representation

Divorce and your small business

On Behalf of | May 23, 2022 | Divorce |

When a person in North Carolina who owns a business gets a divorce, the value and ownership of the company can play into the financial settlement of the marriage. In some cases, this may result in the dissolution of the business. There are steps to take to minimize the damage and prepare for it if it comes.

Business in divorce

A business is at risk for being split even if it existed before the marriage. A prenup or postnup is a good way to protect the business and determine what would happen to it in a divorce. It is the safest and most reliable source of protection, but many people feel uncomfortable doing this. For couples that choose not to do a prenup or postnup, then things become more complex. One tool to help prevent issues down the line is to never mix personal and business assets. For example, do not use a home equity loan to fund business expenses. That can cloud the issue of asset ownership in a divorce.

There are approaches that can help protect the value of the business. For example, putting the business into a trust separates it from you. However, if you do this when you already know that a divorce is coming, then it is fraud, and the transaction will be voided. All of the most effective measures will only work if they are taken well in advance of any divorce.

The best way to protect a business is to take steps at the beginning of the marriage and manage the emotional fallout then. Waiting until the divorce makes everything much harder and carries legal risks if they are done incorrectly.