A lot of blood, sweat, and tears go into making a successful business. After all the hard work, one of the last things you want is to lose a portion of it during a divorce. With careful planning and consideration, there are ways to help make your business divorce-proof.

Keep Your Partner Out of the Business

While running your business with your spouse may seem like a dream, the court may deem the business marital property, thus making your partner entitled to a share. The longer they’re involved in the business and the larger their role, the more likely they’ll be entitled to a share of the business. If they’re already involved, and you can fire them, it’s best to do so, especially if you’re already in the midst of a divorce.

Pay Yourself Well

Many business owners make the mistake of lowballing their own salary to reinvest the rest of the profit into the business. This may seem like a smart move, but an ex-spouse can contest later that they did not receive any benefits because the money went into the business and not the home. This is especially so if you used any joint marital assets to help start the business or pay for any business expenses.

If your spouse argues these points in court, they could be entitled to a larger portion of the business. If you pay yourself a competitive salary, an ex is less likely to be able to say that they, or the household, did not benefit monetarily from your business.

Place Your Business in a Trust

Placing your business in a trust essentially means that a separate entity owns the business. Thus, the property would be considered separate as opposed to marital property. You can also form a corporation or LLC, ideally before marriage but especially before the divorce. This strategy creates a separate entity that would own the business, making it separate property rather than marital, much as a trust would. Once again, it is critical that you do not use marital assets to pay for any business expenses, as this can make your business qualify as marital property.

Have a Lawyer Help You Draft a Prenup

A prenuptial agreement will set out the terms for property division, which can include your business, barring said property from being subject to equitable distribution. In this way, the court can’t determine the equitable distribution of assets and must adhere to the terms listed and agreed to in the document. However, you don’t want to leave any room for the agreement to be contested further down the line.

A family lawyer can help draft the prenup to ensure the document stays legally valid. While hiring a lawyer can feel intimidating, there are questions you can ask a family law attorney to ensure you’re hiring the right one. Arguably, one of the most important questions to ask is what their area of expertise is in family law. There are many different areas of family law, and for the purpose of making your business divorce-proof, you want a family lawyer who’s an expert in divorce law.

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