For small-business owners, the decision to get married comes with a whole separate bag of concerns aside from the typical prenuptial challenges. Whether their business is small and manageable or successful and growing, sole proprietors can make minor changes to their business that may offer major protection for their assets in the event of a divorce.
A successful business has assets that, in the event of a divorce could end up being separated for the sake of property division. Regardless of when your business began, whether prior or during your marriage, business assets can be divided between spouses during a divorce unless protection is in place. One effective way of protecting business assets in divorce is to form an LLC or corporation. This is especially effective if done before you walk down the aisle. When an LLC or corporation is formed, a separate entity is formed that holds legal ownership of your business’s assets.
Whether your business assets include buildings, property or equipment, anything listed under an LLC or corporation may be protected from property division in a divorce. One thing to keep in mind is that commingling marital assets with the business could wipe out the protection offered by the LLC or corporation. If, in a divorce, it’s found that marital assets were used to pay business expenses, those funds could be recouped or worse yet the business could be deemed marital property.
While there are numerous other ways small-business owners can keep their business assets from being divided in the event of a divorce, forming an LLC or corporation is one very effective way to do it. For more information on how you can protect your business from the impact of a divorce, consider speaking to a trusted attorney.