You’re facing one of the most difficult times in your life: divorce. The split has happened, and now you’re worried that the one thing you have left, your business, might be taken away, too. Men find themselves in this very scenario every day.
You work hard to provide for your family, and then you’re hit with divorce papers.
Business must go on even if your life is in disarray; even if you face the potential of losing your business.
There’s little you can do to go back in time and sign a prenup to protect your business, but there are steps you can take to protect it now.
3 Ways to Protect Your Business During Divorce
1. Sacrifice Other Assets to Keep the Business
If your wife helped you build your business or even stayed at-home to watch the kids, she may be entitled to a portion of your business. Men can choose to sacrifice other assets in lieu of an interest in their business.
The goal should be to retain 100% ownership of the business – or your share if you have partners.
You can sacrifice:
- Real estate
- Retirement accounts
- Collectibles
- Cash
Try and come to a fair agreement with your spouse to keep your business intact.
2. Make Payment Over a Period of Time
You can opt to make payments to your spouse over time to satisfy their potential interest in the business. The goal is to gradually pay back your ex’s share in the business on a month-by-month basis.
For example, you may come to an agreement wherein a $100,000 stake in the company is paid off in 50 months at $2,000 a month.
3. Raise Capital to Buy Your Spouse Out
Seek loans to buy out your spouse’s share in the company. Some owners will even sell a stake in their company to an investor so that they can pay their spouse back. The risk in this case is that you’ll have an unknown party owning stake in your business.
But this unknown party may have a contractual agreement wherein they’re a silent partner in your business, which is less of a concern.
Discussing your options with a lawyer is a smart move. You can’t take preventative measures, such as signing a prenup or creating a buy-sell agreement if your partner already asked for a split, but you can still retain your business if you’re willing to sacrifice in some other areas.
