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Don’t let your dream business become collateral damage

On Behalf of | May 21, 2024 | Divorce

Building a successful business takes years of dedication, sacrifice, and a good dose of sweat equity. It’s your brainchild, your livelihood, and a source of pride. The last thing you imagine when facing divorce is the potential for your business to become collateral damage.

However, divorce can significantly impact business ownership, especially in community property states like Nebraska.

Here in the Cornhusker State, assets acquired during the marriage are generally divided equally between spouses. This can leave business owners feeling vulnerable and unsure of how to protect their success.

The good news is that you can take proactive steps to safeguard your business interests during divorce. Understanding the legal landscape and implementing smart strategies can significantly increase your chances of a more favorable outcome.

Understanding Nebraska’s marital property laws

Nebraska follows a community property system. This means that marital property, which includes assets and debts acquired during the marriage, is generally divided equally between spouses in a divorce. This can have a tangible impact on business ownership:

  • Business established during marriage:  If you started your business after you were married, it’s considered marital property subject to division.
  • Pre-marital business with growth during marriage:  Even if you owned the business before marriage, any appreciation in value that occurred during the marriage can be considered marital property.

While these scenarios may seem daunting, there are ways to minimize the impact of divorce on your business. Here are some key strategies to consider:

  • Prenuptial agreement:  A prenuptial agreement, also known as a prenup, is a powerful tool. This legal document allows you to establish how your business will be treated in the event of divorce. An experienced Nebraska family law attorney can help you draft a comprehensive prenup that clearly outlines ownership rights and protects your business interests.
  • Separate property documentation:  If you owned the business before marriage and can demonstrate it through clear documentation (tax returns, financial statements), it strengthens the argument for keeping the business separate during divorce proceedings.
  • Business valuation:  A professional business valuation by a qualified appraiser is crucial. It establishes the fair market value of your business, which can significantly influence the overall property division during the divorce settlement.
  • Buy-sell agreements: A buy-sell agreement can be a lifesaver if you have co-owners in your business. This agreement outlines a process for one spouse to purchase the other spouse’s share of the company at a predetermined price in the event of certain events, such as divorce.

Remember, these are just a few key strategies. Consulting with a qualified Omaha divorce attorney specializing in business valuations and divorce is essential. They can assess your situation and develop a personalized plan to safeguard your business interests.

Beyond legal strategies: Proactive measures

While legal strategies are crucial, there are additional steps you can take to minimize the impact of divorce on your business:

  • Maintain separate bank accounts: Keeping separate business and personal bank accounts clearly distinguishes marital and business assets. This strengthens your case for keeping the business separate during divorce proceedings.
  • Minimize commingling of funds:  Avoid using business funds for personal expenses. Track all business expenses meticulously and keep receipts for documentation. This demonstrates responsible financial management and protects business assets.

Taking proactive steps and seeking qualified legal guidance can significantly increase your chances of protecting your business during divorce. Remember, your business is your dream, and with careful planning, you can ensure it survives even the most challenging life transitions.