How to protect your small business in a divorce

On Behalf of | Dec 7, 2021 | Family Law |

Even if you don’t think divorce could happen to you, it’s a good idea to protect your company if you are a business owner in New York, as almost half of marriages end at some point. Providing legal protection for your company before you tie the knot is also a good idea to prevent possible stress later.

Prenuptial and postnuptial agreements

The most common way to protect your business is through a prenuptial agreement. As there are many different types of business entities available when forming a company, each with its own complicating factors, make sure that you get sound legal advice when covering your business in the prenuptial agreement. Even though a prenuptial is part of family law, your lawyer will still need to know what type of corporation you own, whether partners are involved, etc., to set up the document correctly.

If you didn’t consider including your business as part of a prenuptial agreement, or if you started your company after your marriage, you can draft a postnuptial agreement. These documents contain the same type of information about assets and property and can outline how much your spouse may receive in case of a divorce, the latter of which can help you protect future assets and income.

Other options to protect your business

Dividing marital property can be tricky, no matter how long you have been married. Other options to consider include paying yourself a competitive salary or using a shareholder, partnership, LLC, or a buy/sell agreement as part of your business setup.

In addition, knowing the difference between marital property and separate property can also help you protect your company’s assets. Even if you owned your business before your marriage, not managing it properly can turn it into joint property without protection.