Couples in Illinois on the brink of divorce are typically putting together financial statements in advance of the upcoming property division. Among the items included in these statements may be bank accounts, the house and vehicles. A spouse who owns a business should be aware that the company could also be affected by the separation.
In order to protect a business, experts recommend doing several things prior to getting married. The first would be to have the company’s value appraised. This can demonstrate what the business was worth at the time of the marriage as well as clearly define any appreciation that has occurred. When possible, experts also suggest that spouses sign a prenuptial agreement. This can outline how the business will either be valued or distributed if the marriage were to end.
Couples also have the option of drafting a post-nuptial agreement, which can serve the same purpose as a prenuptial contract. Another legal document that could protect a business owner is a partnership agreement. In this document, the partners can identify how much each would pay for the other’s interest in the company. This could serve to demonstrate what the business is worth.
Most business owners would probably prefer the business to be valued as low as possible in the event of a divorce. Doing so would prevent the spouse from having to sacrifice more than necessary. However, this could have repercussions should the owner want to sell the business in the future. Anyone with concerns regarding business valuation and divorce should consult with an attorney.
Source: Business Insider, “Here’s how to protect a business from divorce,” Jacqueline Newman, June 8, 2015