Divorce is often one of the most difficult experiences a person can endure, and this is doubly true for business owners. If you are facing divorce and worried that the settlement process may dismantle your business, you must make some very difficult choices and act decisively.
The truth is, if you did not take preventative measures like a pre- or postnuptial agreement to protect your business, then your spouse may have a legal right to negotiate for a portion of its value.
However, nothing is written in stone yet, and there are a number of steps you can take to minimize your risk going into the divorce negotiation. After all, it is not fair that your employees and customers should suffer because of difficulties in your private life.
No matter what actions you choose, do not wait to consult with an experienced attorney who can help you create a strong strategy to weather this storm and emerge victorious on the other side.
Consult with an attorney about the nature of your marital assets
In the absence of some written agreement between you and your spouse that protects your business, it may qualify as marital property just the same as a home you both share or a savings account you've built throughout your marriage.
This is not a hard-and-fast rule, and there are circumstances where the business may not qualify as marital property, such as a marriage that lasted only a short time and began after the business was already well-established.
However, if you're reading this, then you are probably not facing those good odds. If so, then now is the time to take action.
Protecting your business may mean tough sacrifices
Protecting your business is broadly accomplished three ways -- separating it clearly from your personal life, determining exactly what it is worth, and, if necessary, negotiating with other assets to keep it intact.
First, you must separate your business as much as possible from your personal affairs. This means keeping very clear, concise records of all your transactions and making sure that your family finances are not tangled up in the business finances or vice versa.
It also means that you must remove your spouse as far away as you can from the business. If they currently work in the business, you should fire them. The greater their involvement in the business, the stronger their claim against it can be.
Furthermore, you must make sure to pay yourself a reasonable, fair salary according to industry standards. If you do not, your spouse may have grounds to claim that you are hiding assets that they rightly deserve to split.
It is also crucial to get a proper valuation of the business, to ensure that you know exactly what it is worth. Otherwise, your spouse may claim that it is worth much more than it truly is, and you could be on the hook for that imaginary value.
If you are unable to fully keep the business off the negotiation table, then you may need to offer up other assets to keep it intact, such as real estate or retirement accounts to buy them out of their share. In some cases, you may need to work out a system of payment over time so that you can keep the business together and weather the storm.
Don't fight for your business alone
Regardless of the specifics of your situation, you definitely need strong legal counsel, and one who understands both divorce law and business law in Ohio. With proper guidance from an experienced attorney, you can chart a clear path to help your business survive your divorce and protect your rights in the process.