It may be possible to protect a business during a divorce

Just as partners do in a relationship, business owners work diligently and make many sacrifices in order to watch their hard work mature into a fruitful enterprise. Unfortunately, while the business may thrive as a result of the effort put into it, an estimated half of all marriages end in divorce. In spite of the end of a relationship, Colorado residents may not have to lose their business in the process.

Every state has its own laws that regulate how assets are to be divided during a divorce; however, there may be steps that can be taken that will ensure that an owner can retain the business one worked hard to build. One way to ensure that the company’s assets are seen as separate from the marriage is to maintain meticulous records that reflect the separation of business assets from personal finances. Another strategy is to pay oneself an appropriate salary based on the worth of the company. Taking less pay in the hope of a better retirement may backfire in the divorce if a court determines the spouse is entitled to a larger share of the assets.

Another way to try and protect a business is removing one’s spouse from involvement if possible, including dismissing him or her if an employee. If there is a chance of retaining the business over other assets, then one may elect to do so if the business is profitable or expected to see significant growth over time. Furthermore, having an experienced professional review the company for its current worth may also help in determining the cash value. If a court decides that the former spouse is entitled to a portion of the assets from the business, it may be possible to arrange a payment schedule using company profits over an agreed-upon time span.

Lastly, if one finds that he or she is short capital needed to pay a former spouse, it may be possible to raise it by offering shares to employees or outside investors. Filing for a divorce can be both emotionally and financially taxing. Colorado residents may choose to seek the guidance of a seasoned attorney in order to preserve a business and emerge in the best financial shape possible on the other side.

Source: entrepreneur.com, “How to Divorce-Proof Your Company“, Carol Tice, Accessed on Nov. 8, 2017