There is nothing quite like the freedom of running your own business in Minnesota. But now that you are thinking about a divorce, everything that you built could be at risk. This means that now is the time to take smart, sensible steps that will preserve your business’s stability and future.
Any steps that you take should not be about punishing your ex or withholding what he or she is rightfully entitled to. Trying to do so may even backfire and put your business in a more precarious situation. It would also likely undo any reasonable efforts you already took to prevent a contentious situation.
Is there time for a postnuptial?
Maybe you are not quite ready for divorce, but are worried that your marriage might be on the early part of this path. If so, you could consider getting a postnuptial agreement that addresses what happens to the business during a divorce. A postnup could address:
- Whether a business is separate or marital property
- Whether value added during the marriage is marital property
- What percentage of that value a spouse is entitled to
- An equal partnership — which spouse buys the other out
It is best to clearly address these and any other conditions you deem relevant. Ambiguity can minimize or even completely erase the benefits of a postnuptial agreement. Leaving room for interpretation really only leaves room for conflict.
Clear up confusion when possible
When you are a business owner, it can be surprisingly difficult to keep your personal and business life separate. Commingling your personal funds with your business expenses may invite extra scrutiny to your income and business valuation. Even without any added scrutiny, simply untangling your personal expenses from your business can be quite a task.
You should also be sure to pay yourself an income that is consistent with current market standards. Your income is an essential factor for both property division as well as support payments. If you pay yourself less than the market standard — perhaps only $85,000 versus a standard of $200,000 — a judge could impute your income as the full $200,000. You would have to pay support based on the larger income while actually paying yourself much less.
Pay your spouse fairly
If your spouse works at your business, be sure that you pay him or her an income comparable to the market rate too. If you do not, he or she could be entitled to a higher portion of your business’s value. This argument could hinge on how his or her work contributed to the business’s value.
The time, hard work and money you put into your business does not have to be for nothing just because you are thinking about a divorce. However, it is important for you to understand the very serious impact a divorce can have on your business. Wading through a sea of information can be overwhelming though, so it may better serve you to speak directly with an attorney who has the knowledge and experience to uphold your best interests.