How to Protect Your Business Interests in a Divorce

For couples that own a business, it is often one of the largest assets in the marital estate. How does a person protect business interests in a divorce? Even a business started by one spouse prior to the marriage may still be seen as community property in a California divorce unless the proper steps are taken. At the Law Office of Bradley S. Sandler, our team has legal expertise and understands the complexities that can arise with protecting business interests in a divorce, and we are here to help. Call or contact the office today to learn more.

Prenuptial and Postnuptial Agreements

One of the easiest and most straightforward ways to protect business interests is to sign a prenuptial or postnuptial agreement with your spouse. These contracts can be signed prior to the wedding (prenuptial) or after the wedding (postnuptial), and they define property interests for both spouses in case of death or divorce. A prenuptial or postnuptial agreement can specifically identify a business as belonging to one spouse or definitively make clear how much of the business each spouse owns.

Keep Business and Home Separate

Another way to protect business interests in a California divorce is to keep business and home finances separate. Keeping the business and marital finances separate avoids the issue of commingling and potential claims by your spouse to part of the company as a marital asset. If your business operates on a mostly cash basis, be sure to keep meticulous receipts so that the value of the business is properly assessed during your divorce.

Pay Yourself a Competitive Salary

In order to protect your business interests, you should also pay yourself a competitive salary. If you reinvest all of your income back into the company or do not pay yourself commiserate with other business owners in a similar position, your spouse may be able to claim part of the business in a divorce. This is because your spouse and the household did not derive any benefit from the business during the marriage.

Be Prepared to Buy Out Their Interest

You should also be prepared to buy out your spouse to maintain control of the business during the property distribution of your marital estate. As a community property state, you and your spouse will split all marital assets equally in the divorce. To keep the business, it may require you to give up other significant assets like the marital home or value personal property. If the value of the business far outweighs other assets in the marital estate, consider negotiating a buyout with your spouse where you make payments to them over time

Call or Contact Us Today

Protecting your business in a divorce can be tricky, but it is possible. If you would like to learn more about your legal options for protecting your business in a California divorce, call the office or contact us today at the Law Office of Bradley S. Sandler now to schedule a free consultation.