Divorce-proofing any part of your life is likely not something that was on the table prior to your joint nuptials, but saving your business in the event of a divorce is something to truly hang onto. With 40-50% of marriages in the United States ending in divorce, you may think twice about safeguarding your business and business assets from an exceptionally greedy spouse.
Obviously, the best course of action is to be proactive, but in all likelihood, you’re in a situation where being reactive is the more likely scenario. As a result, we’ve put together some ways you can protect your business from a bad marriage and a greedy wife.
1. Separate Personal and Business Assets & Money
This is good business in general, but to some, it may seem a little convoluted. Many times, since your business is your livelihood, it can be easy to have a mindset of “what’s mine is mine.” In reality; however, the court will likely see it a little differently. As a matter of fact, if your wife even has a stake in allowing you to partake in business while she tends to other business in the marriage, she may be entitled to a part or whole of your business dealings.
Do yourself a favor and make sure your business finances are 100% separated from your personal assets. This includes making transactions for business exclusively from a business account and personal expenses exclusively from personal accounts. Straighten out this aspect of your business before it’s too late.
2. Fire Your Spouse
Many small businesses start with an idea within a marriage, and in the beginning, most of the business operations will be jointly conquered by a couple. Before you know it, though, your business is thriving with employees, assets, and the like but your spouse has distanced herself from your hardworking nest egg. Many times, though, the legal documentation still reflects your spouse as a major stakeholder and decision-maker.
If this sounds familiar, it’s time to take charge and fire your spouse. Make any corporate resolutions or documentation necessary to authorize the termination, and get her out of your business dealings. Sometimes this can be done amicably, but you may have to do a bit of politicking and coercing to convince her that “this is in the best interest of the business.”
3. Buy Your Spouse Out
Depending on how your relationship stands with your spouse, you may have to take an alternate route to getting her out of your business. If firing isn’t the way to go, consider raising capital and buying out your wife’s interest in your business. Raising capital can be as simple as bringing in more investors (read “friends of the program”) while buying out your spouse’s interest in the company.
While you may very well sacrifice some of your interest in the business, with the help of some friends, you can still retain decision-making and authoritative power in day-to-day dealings. Additionally, your wife will have little argument to make as she relinquished her financial interest in the business. She can still make an argument in court for her fair share, but the release of that interest will give you some power in court.
4. Make Some Sacrifices
Despite your best efforts to gain as much interest in your business as possible, the court may still divide the property of the marriage down a decisive line. If you can’t win the battle upfront, you may have to win the battle in the trenches by letting some other assets go. Marital property may be divided 50/50 right down the middle, and your business will likely be part of that division. Instead of giving your spouse 50% of your business, consider giving up a car, the house, or another piece of physical property to even out the split.
Businesses often fall into the chasm of joint marital property, but can sometimes be argued as separate property depending on when the business was started and how much stake your wife had in its financing and operation. You may have some leverage if you brought your business into the marriage, but your wife and her attorney will likely have different ideas.
5. Know What You’ve Got and Be Prepared
One of the things you can do to prepare for your divorce proceedings is to take a full inventory of your business. This includes, but isn’t limited to, bank accounts, physical assets, investments, property, and even employees. Take a full count of everything and know your company’s valuation. It may be wise at this point to get a professional involved to value your business and have that value documented. Otherwise, a court-appointed valuation expert may have a differing opinion.
Most importantly, be prepared for what’s to come. Anything you can do proactively to protect your business will pay dividends during litigation and throughout your divorce proceedings. The best thing you can do is to get an attorney experienced in men’s rights to do the legwork for you. That’s what The Firm for Men does. We’re the only family law firm in Virginia representing men only! Never has a woman darkened the door of The Firm for Men and received representation in a court of law. Go with men’s rights and get what you need and what you deserve.