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Protecting a business during a divorce

Divorce is difficult by most people’s standards. No matter what assets a couple may have, splitting up can be difficult and very emotional. When a couple has a large number of assets or one or more businesses to divide, however, there may be a need for experts in matters such as business valuation or financial planning.

What is the best way to protect a business during a high asset divorce? A prenuptial or post-nuptial agreement. This important legal document can specify how your business would be handled should a divorce occur. Should you find that your spouse wasn’t going to sign either of these documents, then a business appraisal should be done so that if the business appreciates during the marriage, there would be a clearly identifiable value when the marriage occurred.

If your business is a partnership, then you’ll want to have a clearly defined, written agreement about how your share would be valued if the other partner(s) were to buy you out. This could be used to determine how much your spouse’s interest would be in your share. However, most people want the valuation to be low in this instance, as this means they will likely owe less to their soon-to-be ex-spouses.

A low valuation, though, could pose problems in the future if you ever want to sell the business and a potential buyer asks you if an appraisal has been done. After the possible buyer sees the low valuation, you could have some explaining to do. You can seek advice on how to handle your business valuation and other high asset divorce issues from an experienced family law attorney.

Source: Business Insider, “Here’s how to protect a business from divorce,” Jacqueline Newman, June 08, 2015