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Divorce and business: how to protect your company during a split

Many married couples start businesses together, and it can prove very fruitful for both parties. However, should the personal side of the relationship deteriorate, then the business side could suffer as well. That's why it is important for business owners to set themselves up properly to protect their business should a divorce arise. The number of assets and debts that are tied up in a business are very valuable, and the last thing any owner wants is for some or all of these things to go to waste.

So, how can a married business owner protect his or her company in the event of a divorce? Here are a few tips to help get you on your way:

  • First and foremost, on the family law side of things, you could sign a prenuptial agreement that outlines how your business and its assets will be handled in case of a divorce.
  • On the business side though, you could use a partnership or shareholder agreement that protects the business in case of a divorce.
  • One strategy to consider if it is too late to protect your business is a buy out. You could buy your spouse out of the company, making things a little easier as the divorce proceeds. This buy out would likely be complex, and you would need some legal assistance to ensure the deal is properly outlines. But, a future earnings clause can usually benefit both parties in the deal.

Nothing is a guarantee, mind you -- but these tactics could help a company survive a divorce.

Source:, "How to divorce-proof your business," Rosemary Frank, March 2, 2014

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