As an entrepreneur, your business is much more than a job; it’s your passion and probably your most valuable asset. You’ve poured in endless hours and hefty resources to build it from the ground up. Naturally, you’d want to shield it from any potential harm.
Now, let’s address the elephant in the room: divorce.
While no one ties the knot to break up, statistics show that 40-50% of marriages in the U.S. end in divorce. And if your business gets tangled up in settlement discussions, it can shake the very foundations of your company.
Many small business owners find themselves unprepared when divorce knocks on their door. In this post, our divorce attorneys in layton will dive into what happens to your business if you find yourself in the middle of a divorce, and how you can save it from becoming a casualty of your break-up.
Understanding the Legal Landscape
When it comes to how divorce cases in Utah will impact your business, a court will first decide if your business is marital property or separate property. For this, they’ll consider:
- When you formed the business
- How much time has passed between your business formation and marriage
- The success of the business before and after your marriage
- Your spouse’s involvement in business formation
- Your spouse’s contribution to business operations or growth
- Changes in business valuation over time
In this regard, a lot depends on where you live. If you’re settled in a community property state, almost everything you’ve acquired during the marriage, including your business, might be split down the middle.
However, in equitable distribution states like Utah, your property is divided based on what’s considered fair, which doesn’t always translate to a 50-50 situation. The judge may decide on the distribution based on:
- The length of your marriage
- The age and health of both spouses
- The occupation and income of each spouse
- The financial needs and liabilities of each spouse
- Contributions of each spouse to the marriage, including care and education of children and the contribution of a spouse as a homemaker
- Any fault that might have contributed to the breakup, if relevant (though Utah is a no-fault divorce state, fault can sometimes play a role in the division of assets)
Either way, divorce can put business owners in a tricky spot. You can end up having to share your business with your ex, which is probably the last thing you want. However, it can happen if you don’t plan ahead.
You may be able to negotiate to keep your business by giving up more of other things like your house, cars, and maybe some vacation property. But if there’s no way around it, the court might even sell your business and split the money. This is usually a last resort, especially if the business is what pays the bills.
Also, if you’re worried about your ex messing with the business out of spite, like bad-mouthing you to clients or messing up operations, you’ll need to have plans in place to stop that from happening.
Protecting Your Business
You might not want to think about divorce when starting a new life with your partner. But if you own a business, it’s smart to plan. Here are some solid ways to protect your business if things don’t work out.
Prenuptial Agreements
A prenuptial agreement is your business’s safety net. While it’s not the most romantic thing, it’s practical.
This agreement sets the rules for what happens to your business if you ever get divorced. You can declare your business as separate property, which means it stays yours, no matter what happens in your personal life.
Buy-Sell Agreements
If your business has more than one owner, a buy-sell agreement is a must. It lays out what happens if any owner gets divorced. A buy-sell agreement protects the business from getting dragged into divorce dramas and outlines how an owner’s stake can be bought out. This way, your business operations stay smooth, and everyone knows what to expect if things get messy.
Trust Structures
Putting your business assets into a trust is another way to keep them secure. By transferring your business, you effectively shield it from being considered a personal asset in a divorce. Although this setup takes some heavy-duty legal and financial planning, it’s a powerful way to make sure your business assets stay where they belong.
How A Divorce Attorney in Layton Can Help You
Are you facing a divorce and worried about the impact on your business? Hiring a divorce attorney in layton can be a game-changer. Here’s how they can step in and help:
Expert Guidance on Local Laws
First off, a divorce lawyer in Utah will have a solid grip on state-specific divorce laws. They’ll know the ins and outs of how marital and non-marital assets are handled. They’ll also leverage their expertise to tailor their advice and strategy to the local legal landscape, so you’re covered where it counts.
Strategic Asset Protection
Your lawyer isn’t just there to guide you through Utah divorce laws; they’re there to strap a shield to your business. They’ll help you draft a tight prenuptial agreement, set up strategic buy-sell agreements among business partners, and navigate the complexities of creating a trust.
Peace of Mind When You Need It Most
Most importantly, having a divorce lawyer by your side means you’re not alone in this. They’re your advocate, ready to fight for the best possible outcome for both you and your business. A lawyer can handle the stress of the legal proceedings and divorce settlement in Utah, so you can keep your focus on running your business and moving forward.
The Bottom Line
The end of a marriage is highly stressful, and the added anxiety of potentially losing your livelihood can be downright terrifying. Moreover, the strain of divorce litigation can significantly hinder your ability to maintain your usual work pace. Taking steps ahead of time to protect your business can help it survive through the turmoil of a divorce.
Facing a divorce and worried about your business? Don’t let the stress and uncertainty take over. At Jeremy Atwood Law, we specialize in protecting your business assets and guiding you through the legal complexities of divorce. Contact us today for a consultation and let us help you secure your future and your livelihood.