Starting a new business is a challenge even for the most experienced entrepreneur. It often takes years to build a viable customer base and enough revenues to generate a profit. When business owners are married, their spouses share the profits. When going through a divorce, many owners’ spouses claim that they have a legitimate right to share in the wealth generated by their spouse’s business. This is assumed because they were present during its creation or they may also claim to have worked at the company in an unofficial capacity without compensation. To protect your business during a divorce, you must first understand the potential impacts on your business.
Business wealth or assets may include:
- Bank accounts
- Retirement accounts
- Insurance policies
- Stock portfolios
- Personal and commercial property
- Investments or stakes in businesses
Protect your business during a divorce
One way a business owner can protect their assets is by drafting a prenuptial or postnuptial agreement. Prenuptial agreements detail the various assets a couple owns going into the marriage. This helps clarify what is separate property (not accrued during the marriage).
If you and your spouse do not sign a prenuptial agreement, you have the option of drafting a postnuptial agreement. However, Georgia trial judges have discretion whether to include a postnuptial agreement into a divorce settlement. The judge will only authorize a postnuptial agreement if they are convinced the contract is fair, reasonable, and was not signed under pressure.
Another way a business owner can protect their assets during a divorce is to draft a business operating agreement. Business operating agreements are contracts between business partners.
These agreements can specify that one partner’s interest in a business cannot be transferred without the prior approval of the other partners.
Business operating agreements can also give partners the first right of refusal to obtain any shares sold by another partner.
A knowledgeable attorney can help you draft prenuptial, postnuptial, and business operating agreements that are enforceable and safeguard your assets.
If you are a business owner who is facing a divorce, don’t delay. Contact Sauls Law Group at (770) 212-9168 for a consultation today.