Is There A Way To Divorce-Proof My Business?
As attorneys who focus on divorce and family law, we regularly see people who worked hard to start and develop their own business, only to turn around and lose part of that business to their spouse when they file for divorce. Some even have to give up their share of their own company as part of a settlement agreement, which can bring feelings of tremendous loss and despair, all while also having to go through the emotions that divorce can bring on.
This is a frightening prospect for many—that they would not only lose all or part of their business, but also any growth of the business that occurred during their marriage. However, this does not have to be the case: there are ways to “divorce-proof” your business. Below, we discuss some of these options:
Pre- and Postnuptial Agreements
One fairly straightforward way to do this is via a prenuptial agreement (“prenup”). A prenup is a written agreement executed between two individuals preparing to be married that—amongst other provisions— sets forth what will be kept and/or remain separate property in the event of divorce. However, in order to be effective, it must be executed in accordance with a number of requirements, including full financial disclosure, in front of witnesses, and with each side represented by its own legal representation. Its terms also cannot be “unconscionable,” i.e. so unfair as to violate public policy.
And if you are already married and it is too late for a prenup, you can always work with an attorney to execute a postnuptial agreement instead. Keep in mind, however, that you will want to continue to work with your attorney in order to ensure that you continue to keep your business income separate so that your spouse cannot claim that, regardless of the pre- or postnuptial agreement indicating that it was separate property, business income was commingled with marital income and thus turned into marital property.
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. The advantage of this option is that it does not require your fiancé’s approval or signature first. However, keep in mind that trusts are complex legal entities, so you will want to make sure that you work with an attorney is experienced in both family law and in facilitating asset protection trusts.
Prepare Now—Contact Our Florida Family Law Attorneys
The best time to prepare for the future is before you get married. However, even if you are already married, and regardless of whether you are even contemplating the possibility of divorce, it is still wise to take measures to protect your business. Contact our Florida divorce and property division attorneys at the Arwani Law Firm, PLLC today to find out how we can help.