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Considering divorce? Three tips to protect your family business.

A family business generally offers owners more than just a career - these businesses are personal. As such, those who find themselves considering divorce may have concerns that their business could be at risk.

These concerns are valid, but proactive steps can be taken to help reduce any negative impact a future divorce may have on the business.

What can I do to protect my family business from my divorce? If you find yourself asking this question, you are not alone. In fact, the question is so common that MarketWatch recently published an article digging into the issue.

Some tips are most applicable to couples prior to getting married. Tips like getting a prenuptial agreement that specifically outlines what would happen to the business in the event of a divorce. Ideally, this step was taken. Unfortunately, not many people look this far ahead when preparing to walk down the aisle.

I didn't get a prenuptial agreement. Now what? Thankfully, you are not out of luck if you find yourself in a shaky marriage without a prenuptial agreement that addresses the business interests.

There are still steps that can be taken to protect your business interests. These steps include:

  • Postnuptial agreement. If your marriage is shaky and you think divorce may be around the corner, a postnuptial agreement can protect your business. This document is similar to a prenuptial agreement in that it outlines how assets should be split in the event of a divorce. It differs because it is put together after the marriage.
  • Trusts. When putting together a postnuptial agreement, it is wise to consider establishing a trust for business assets as well. This is particularly true for high net worth businesses. A trust can help not only shield business interests from a divorce, but can also help better ensure the business interests survive over multiple generations.
  • Continue as co-owners. In the event that the spouse is a co-owner of the business, it may be best to continue as such even after the divorce.

Determining the best way to protect your business interests depends on the details of your situation. As such, anyone looking to protect these interests before a divorce, or looking to mitigate the impact of a divorce on a business, is wise to seek legal counsel.

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The Barbknecht Firm, P.C.
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