Few people get married in Virginia thinking about the consequences of divorce. But people with considerable assets, including business owners, need to weigh the possible impacts. Divorce can have far-reaching effects on a business. That’s why it’s essential to put protections in place while a relationship is thriving to safeguard your company’s long-term health.
Divorce can compromise a company by disrupting day-to-day operations – forcing you to attend court hearings and meetings with your lawyer as well as other divorce-related business during the workday, taking you away from your professional duties. It can also occupy your mind at work when you should be focusing on the job.
Divorce can also cause repercussions for your business partners and employees. What will the outcome mean for your share of the business? Will your spouse be paid in stock for his or her share, and does that mean they’ll become an uninvited partner or sell, possibly affecting the company’s value?
In some cases, a divorce can mean the end of a business. If you are equal partners and don’t have the cash on hand to pay your spouse for their share, the only option may be to sell the company. Also, negative publicity over a contentious split can damage your brand and image, resulting in lost customers.
The good news is there are steps you can take to mitigate these risks. The best option is a pre- or postnuptial agreement that details how the business will be divided in case of a divorce. The document clarifies whether one party owned the company before the marriage, how your spouse shares in the business and how they will be compensated.
Without a pre- or postnup in place, you can still protect your company by detailing all business capital sources and whether they were marital or premarital funds. You can also protect yourself by keeping your business and personal expenses separate, fully documenting cash transactions, paying yourself a fair salary and paying your spouse a fair market salary if he or she works at the business.
Finally, to keep disruptions at a minimum during a divorce, keep work and divorce activities separate, be a meticulous scheduler so you can take care of personal tasks such as emails and phone calls for divorce business, as well as your professional obligations. Finally, don’t overwhelm your employees with document requests. Try to get everything you need the first time.
An experienced family law attorney can help you at any stage by putting a pre- or postnuptial agreement in place or representing your interests if no agreement exists. Your lawyer will work for the best possible outcome protecting you and your company’s future.