Most married couples bring their own assets and debts into their relationship. For example, it is not uncommon these days for people to have thousands of dollars in student loan debt by the age of 22. Conversely, there are times when an inheritance from a relative will unexpectedly boost financial security. These types of unique assets and debts can quickly become commingled in a marriage. And when a person who owns a business gets married, protecting that business can become a concern of paramount importance. So, how can Pennsylvania residents protect their businesses in the event of a divorce?
Well, for starters, most business owners are familiar with contracts of every kind as they run their companies. Contracts can play a role in protecting business assets in a marriage, too. If the marriage is only in the planning stages, a business owner may want to consider the benefits of a prenuptial agreement. A prenuptial agreement can specifically state that the business is a separate asset that will not be part of any future divorce proceedings. If the marriage has already occurred, a business owner may want to consider a post-nuptial agreement, which serves the same purpose, but is drafted and executed after the marriage occurs.
If, however, a contract doesn’t seem feasible for any reason, a business owner can also take other steps to protect their assets, such as:
- keeping the business and its finances separate from the marital assets
- keeping clear financial records for the business
- drafting a business arrangement that specifically states that ownership interests in the business cannot be transferred in the event of a divorce
- knowing your company’s value