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Steps to protect a business in divorce

Every marriage has its ups and downs, but when a married couple owns a business together and differences between them arise, separation or divorce can negatively impact the prosperity of the business. Any Florida family law attorney will agree that just because a couple who owns a business together is seeking a divorce does not necessarily mean that their business should suffer.

During a divorce when a business and its assets are a large part of a couple's marital property, invariably there will be a discussion on how to divide the business. Rather than losing a business due to divorce, it is in the best interest of the parties to explore legal options to protect not only their business, but also themselves post-divorce.

Options to prevent the sale of one's business during a divorce or to prevent breaking-up the business include drafting a prenuptial agreement, which explicitly lists one's business as separate and not marital property. In the absence of prenuptial agreement, a postnuptial agreement also can be drafted. Additionally, shareholder agreements can be used to prevent a spouse from claiming any part of an existing business during a divorce. Finally, it may help to keep personal and business finances separate.

In cases where the aforementioned steps were not explored and divorce is imminent, it may be essential to conduct a business valuation, and see if one can buy out his or her soon-to-be-ex-spouse's share in the business. Other assets may have to be used to accomplish this. In the absence of other funds, one may have to either seek investors or borrow money to buy one's ex-spouse's share in the business or one may have to draft a payment plan that uses any future earning to make the purchase.

Regardless of the options one explores to protect a business, it is a good idea to consult with a family law attorney familiar with pre-postnuptial agreements, business valuations and other options.

Source: Jacksonville Business Journal, "How to divorce-proof your business," Rosemary Frank, Mar. 2, 2014

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