Your business is your life’s work and your livelihood, and when it comes to divorce, all of that may be at stake. The complex laws governing the intersection between divorce and business make asset division a critical and delicate task.
Without the right knowledge of how to protect your business in the divorce proceedings, you may be putting everything you have at risk. Here are a few tips to help you prepare for the divorce in terms of keeping your business safe and mitigating the negative financial effects.
Proactive steps to protect your business
If you are not already facing a divorce but you suspect it may be in your future or you simply want to be proactive and take preventative measures, there are several things you can do in terms of pre-divorce planning. The first of these is to get an accurate business valuation. After all, a true representation of the worth of your business is essential for knowing how much money is in question when it comes to dividing assets.
Ensure you are paying yourself a salary that is consistent with the market rate for someone in your position. If you underpay yourself, you may end up shorting yourself during the divorce process because you walk away with a smaller portion of what you should actually be earning.
Keep the business as separate as possible from your personal expenses. The more you mix finances, the more confusion it creates when it comes time to sort out who gets what in a divorce settlement. Especially in a contentious divorce, you want to ensure you have clean and clear record-keeping.
Steps to take when facing divorce
If you are already facing a divorce and there is no time to take proactive preventative measures, then you may need to shift your approach. You and your attorney should focus on building a strategy with the objective of getting a fair and equitable divorce settlement and protecting your business. With a good strategy, you may still be able to come out ahead.