After working hard to build your business, you don’t want to risk it failing or you losing control in the event of a divorce. Failure to plan for this and other contingencies such as death or disability leaves your business at risk, your assets unprotected and your family, employees, and others you care for unprepared. There are legal steps you can take to protect your business for the next generation if a family member gets divorced.
Divorce often causes unforeseen disruptions, such as being forced to sell a business when you decide to get a divorce. If you own a business and are married, you should protect your business in case of a divorce.
There are many ways your divorce could have a negative impact on your business. According to a recent article in Forbes Magazine, some ways your business could be affected are:
Divorce can threaten a family business succession plan. When a family member who owns or who will inherit a family business goes through a divorce, the family business can be at risk. There are legal steps you can take to protect your business in the case of divorce:
1. Pre-nuptial and Post-nuptial Agreements
In Georgia, you and your future spouse can make a contract outlining rights to spousal support and division of marital assets in case you divorce. This is commonly known as a prenuptial agreement. If you own a business separately or jointly before your marriage, a prenup can protect both parties’ rights in the case of a divorce.
If you do not have a prenup, you can also enter into a postnuptial agreement, which is drawn after marriage. If you start a business separately or jointly during your marriage, a prenup can protect both parties’ rights in the case of a divorce and protect the business.
Prenuptial and postnuptial agreements are enforceable if they comply with Georgia law. Rules for pre-nuptial agreements differ from state to state. Some states do not allow postnuptial agreements so it is best to rely on the advice of an experienced family law attorney.
2. Asset Protection Trust
Asset protection trusts can protect someone from the effects of divorce, taxation, bankruptcy, and other claims against their property.
3. LLPs and LLCs
Limited liability companies (LLCs) and limited liability partnerships (LLPs) are business management structures that define how decisions will be made by the business partners and to protect your business liability.
4. Buy-Sell Agreements
A buy-sell agreement is a legally binding contract that defines how a partner's share of the business will be sold or transferred if that partner dies or leaves the business.
For more information about how to ensure your business is protected in the case of a divorce, you may benefit from the advice of a divorce attorney. Contact us today by completing the Case Review form or call Attorney Sharon Jackson LLC at (678)436-3636.