You toil away at your business all day. Your spouse pops into your office every so often, but it’s your business, your baby. And if you get divorced, it will remain that way, right?
New Hampshire is an equitable distribution state, meaning that in a divorce, the spouse who doesn’t run the business likely is to receive at least a share of it. While a court might give you ownership of the business in a divorce, you likely will owe your ex-spouse a portion of the value. After all, even when you were starting your business, your spouse probably played at least some role – the early accountant or personal assistant, for instance – or took care of the kids and all family duties while you got the business off the ground.
If you don’t have either a prenuptial or postnuptial agreement that addresses the future of the business, there still is a way you can establish its ownership to protect a fair division of that asset. Ways to do that include:
- Have legal documents drafted that declare you are the sole owner of the business and that in the event of divorce, it can’t transfer ownership. Instead, make a provision for a cash payment to your spouse.
- Maintain a paper trail on how the business was financially formulated. Was it through your funds or joint monies?
- Make sure your business and personal finances are separate.
- If your spouse works at the company, pay market rate to be able to prove they were compensated.
This is just a primer on business and divorce. Your divorce attorney can go into more details about the future of your business in a divorce case.