Divorce impacts many areas of life, both personal and practical. For business owners, divorce may require extra planning and careful execution. Without a strong legal strategy, a business owner’s divorce may end up dissolving or crippling the business itself, affecting employees and clients of the business as well.
If you own a business and see divorce in your future, now is the time to begin building your divorce strategy. Businesses take many forms, from simple operations one can run out of a spare room to companies with multiple employees. Still, a business is essentially a piece of property that a person may own, meaning that businesses qualify as property that spouses may divide in divorce. Protecting your business may require significant sacrifices, so you must prepare properly to create the future you want after your divorce finalizes.
Is your business marital property or separate property?
Not all married business owners must fear dissolving their business in divorce. Nebraska allows equitable distribution of property, meaning that spouses may agree on a fair division of assets that is not a fifty-fifty split. If your business is relatively small and does not carry much value, or if you owned the business before your marriage, your divorce may not impact it heavily.
However, if the business has significant value that your spouse may want to share, you must plan accordingly. First, it is wise to understand how much of a claim your spouse may have on the business. If they do not interact with your business in any significant way, then you may have grounds to claim that the business is separate property. Make sure to keep clear records of your business finances so that you can show this separation in court if necessary.
Sharing the value of your business
If your spouse has a claim on a portion of the value of your business, then it is a good idea to understand exactly what your business is worth. Typically, a third-party business valuation is the most widely accepted tool for determining a business’s worth.
A business valuation assesses every aspect of your business to give all parties involved a clear picture of its value, including hard and soft assets and likely income over time. If your spouse claims a portion of the business’s value, you can both negotiate using the same understanding of this value, rather than fighting over the business’s value itself.
Depending on the value of the business and the portion that your spouse claims, you may need to trade your spouse other property to compensate them fairly. If you do not have sufficient liquid assets to trade, it is also possible to establish a payment plan to compensate your spouse over time.
A strong legal strategy assesses all of these possibilities and uses the strength to the law to keep your rights and priorities secure while you work to dissolve your marriage responsibly and move on to the next season of life. With careful planning, you can navigate this difficult season and emerge on the other side, ready for whatever life brings in the next chapter.