If you’re both married and a business owner, it is important to think about what may happen if you get divorced. Taking proactive steps today could allow you to retain complete control of your Pennsylvania company after the marriage ends. Let’s take a look at what you can do right now to ensure that your organization remains intact regardless of what happens in your personal life.
Buy an insurance policy to buyout your spouse
An insurance policy may be used to buy out your spouse if he or she receives a portion of the business in a divorce settlement. If you don’t have an insurance policy, it may be possible to negotiate a payment plan that allows you to comply with the terms of a settlement without having to sell the company or its assets.
Use separate funds to run the business
It may be easier to claim that the company is separate property if you only use separate funds to operate it. This means that you shouldn’t take out a home equity loan on a home that might be considered a joint asset or use money currently sitting in a joint account to buy equipment or pay workers. Creating a prenuptial agreement or putting the company in a trust may further strengthen your argument that the company shouldn’t be divided in a divorce.
In a divorce, any item that is considered a joint asset will likely be subject to equitable distribution laws. However, an attorney might be able to negotiate a settlement that allows you to retain ownership of your company even if your spouse has a valid claim to it. In some cases, this will require you to give up an ownership interest in a family home or a joint retirement account in return.