Those who own businesses are often very protective of the companies they operate. Whether someone started or inherited a company, it may be their sole source of income. Being a business owner can often play a major role in someone’s personal identity as well. A business represents not just current and future income but also investments made by an individual and possibly their loved ones.
Those contemplating divorce in Washington often worry about what would happen to the company that they run at the end of a marriage. There are certain strategies that may help business owners protect their organizations from instability or dissolution triggered by a divorce.
Consider whether the business is separate property
There are several ways in which a business owner may maintain that the company is their separate property. If they inherited the business, they could potentially claim that it was and remains their separate property. A business might also be separate property if someone had already created the company prior to marriage. Finally, those who signed a prenuptial agreement may have specifically designated the business as their separate property to protect it from division in a divorce.
Negotiate a postnuptial agreement
Those considering divorce may still hope to preserve their marriages. The negotiation of a postnuptial agreement can play a major role in saving a struggling marriage. Each spouse can potentially clarify their expectations for the other and the future of the relationship. The spouses also have an opportunity to preserve certain assets as separate property and discuss what could happen to marital resources should they later divorce.
Conduct a business valuation
Sometimes, the business is part of the marital estate to be divided because someone started it during the marriage, possibly with their spouse, and used marital resources to improve the company. It may even be that both spouses have worked in the business. Someone hoping to retain sole ownership of the business in a divorce could offer to compensate their spouse for a portion of the company’s value in their divorce proceedings. Performing an accurate and thorough business valuation is often a key component of buying out a spouse to preserve the business after the divorce. Otherwise, the divorce process could put the company at risk of sale or dissolution.
Business owners facing a divorce should speak with their attorneys about concerns they may have for the business and about how the law in Washington will address the business in the divorce.