For any business owner, building a successful business takes years of hard work, dedication and financial investment. The last thing you want is for that business to be affected during an already difficult time, such as a divorce.
Without proper planning, divorce can create financial and legal challenges that put your business at risk. Knowing how to prevent harm to your business during the legal process can help you avoid costly mistakes that may be difficult to correct later.
Preserving your business assets during divorce
In Ohio, the court may consider your business marital property if you established it during your marriage. According to the state’s equitable distribution laws, this means the court divides marital property fairly, though not always equally. Here are some steps that may help secure your business during a divorce:
- Keep clear business records: Get an independent business valuation, review prenuptial or postnuptial agreements and keep personal and business finances separate to help show the company’s value and ownership.
- Use agreements to protect ownership: A buy-sell agreement may help limit who owns company shares and help prevent ownership conflicts during a divorce.
- Explore settlement options: You can negotiate a buyout or trade other marital assets in exchange for keeping the business.
If the business is subject to division during a divorce, the court may consider a professional valuation. A business valuation examines factors such as assets, liabilities, income, market conditions and future earning potential. The result determines the value of the business or marital interest, while the court determines what property is subject to division.
Plan ahead when divorce is possible
A divorce does not have to mean losing control of the company you worked hard to build. Knowing how Ohio’s laws that apply to your company, keeping accurate financial records and planning properly can help reduce disagreements and safeguard your assets. If divorce becomes a possibility, understanding how it may affect your business can help you prepare for the process.
