How to Protect Your Business Financially During a Divorce
Are you a business owner who is considering divorce amongst the pandemic? If so, you are not alone, the COVID-19 pandemic has caused a lot of stress and upheaval. Whether that stress has been financial, emotional, or caused by other extenuating factors, it has definitely contributed to the rising divorce statistics.
When there are children, real estate, and businesses involved in a divorce, it definitely makes the divorce process more complex.
By being more knowledgeable, it can give you the upper hand. It is best to speak to legal and financial professionals who can provide guidance based on your state’s regulations.
The first aspect to consider is that your spouse’s attorney may request financial documents related to the business as well as an explanation of what type of business you own and how it is structured.
It is best for you to continue focusing on your business and perhaps appoint your accountant or a business appraiser as the designated person who will compile all the necessary documents and information.
Furthermore, the best way to approach this is to be upfront and honest and not hold anything back. The more upfront you are from the beginning, the smoother the entire process will go.
It is also important to consider that depending on the complexity of your business; your spouse’s attorney may not understand the business; which can complicate matters if not handled strategically. The best way to handle this is to set up a meeting with both side’s attorneys, both spouses, and a financial expert. This meeting will help provide more clarity to your legal team so they can provide the best guidance.
What Happens When Both Spouses Own the Business Together?
For the most part, it is unlikely that both parties would remain a part of the business after the divorce. A more realistic scenario may be that one party may end up buying the other party out or giving up the business with their soon to be ex-spouse and start a separate new business (whether solo or with additional business partners).
The business partner that usually ends up staying in the business or buying the other partner out is the one that was the most involved in the business (this can equate to more hours spent, more investment spent, more contributions made, etc.).
If you need assistance with how to protect your business financially during a divorce, contact Sabra Law Group today for a confidential consultation at (646) 472-7971.