As a business owner, you know that divorce could pose a threat to your business. If your spouse is a part owner of your company or has a claim to some of your business value, you may have to sell your business to produce proceeds for your spouse. Still, you might prevent this from happening if you establish that your spouse has little or no claim on your business.
With the proper documentation, you may stand a chance of emerging from divorce with your business intact. There are a variety of documents that may assist you.
Prenuptial or postnuptial documents
The Motley Fool explains that you could establish your business as separate property with a prenuptial agreement. You and your spouse may use a prenup to clarify your spouse’s role in the business, including whether your spouse has any part in your operation. Even if you get married without a prenup, it is still possible to create a postnuptial agreement that protects your business.
Organizing documents
In the absence of a prenuptial or postnuptial agreement, your business organizing documents might still establish that your spouse is not a formal owner of your company and that you alone are the owner. These documents might also limit the transfer of ownership of the business in a divorce. Such provisions might make it difficult to sell the business and could encourage a different option like buying out your spouse.
Business financial records
If possible, you want to show that there was no commingling of business and personal assets. Putting your personal money into your business could enable your spouse to claim that you used marital money for your operation. Your business financial records may show this was never the case.
Even if you had invested your personal money, you might have done so before getting married. Your financial records may prove that you only used personal assets prior to tying the knot and you never utilized personal money once your marriage started.
Pay records
Your pay records could also establish that your spouse never worked at your business. But even if you had employed your spouse for a time, your pay records might show that your spouse received a fair market rate and has no entitlement to more money due to underpayment.
With the variety of business records you probably use, you should have a number of ways to bolster your case even if you do not have a prenup. Still, having a prenup or a postnup in addition to your other documents may make a crucial difference in preserving your business.
