Ways to “Divorce-Proof” Your Business
As attorneys who regularly advise clients contemplating divorce here in Florida, we see a number of people concerned about what’s going to happen to their business in the event of divorce. After years of hard work starting and developing your own business, to lose some of it in divorce – or have to give up your own share as part of a settlement agreement – can bring about a significant amount of despair during an already difficult process.
However, this is not inevitable: There are ways to divorce-proof your business such that you don’t have to share it—as well as any growth in its value—with your spouse, even if that business was started during your marriage. Below, we discuss some of these options in detail:
Pre- and Postnuptial Agreements
The most straightforward way to make sure that your business is divorce-proof is via a prenuptial agreement before you get married, or a postnuptial agreement if you are already married. Keep in mind that this has nothing to do with how happy or unhappy you are in your marriage; it is simply an agreement that couples use to designate what will remain separate property (amongst other provisions) in the event of divorce; an agreement that plenty of happy couples who stay married still enter into because it is wise to plan for your business’ assets. Note that you will want to work with an experienced attorney in any type of agreement to this effect because not only do these agreements require full financial disclosure, but they must also be executed before witnesses, while each party has its own legal representation. In addition, the terms of the agreement cannot be unconscionable—i.e. so unfair as to violate public policy principles. Note that these same rules apply to both pre- and postnuptial agreements.
Domestic & Foreign Asset Protection Trusts
Another option is to transfer ownership of your business into a trust, such as a Domestic or Foreign Asset Protection Trust. Although trusts of this nature can be complex legal instruments that require the oversight of an attorney who not only has experience in family law, but also in this type of property and estate planning, they do not require your fiancé’s approval or signature.
Start Early: Contact Our Florida Divorce & Property Division Attorneys
The best time to protect your business is before you get married. However, even if this was not the case, you still have time to do so—long before even potentially contemplating divorce. Nothing compares to excellent legal advice when it comes to ensuring that you understand key legal principles so that you stay protected. In the same way that you purchase homeowners and/or auto insurance in case of unexpected events, you want to make sure that you “insure” your business in the event of divorce—regardless of how happily married you are. Contact our Florida divorce and property division attorneys at the office of William Wallshein, P.A. today to find out more.