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What happens to your business during a divorce?

On Behalf of | Jun 15, 2022 | Divorce

Arkansas business owners going through a divorce naturally take every measure they can to protect their company. It’s important to know what can happen with your business and whether the court will divide it as part of the divorce settlement.

How is a business affected by divorce?

A business can be affected by a divorce in different ways. The most obvious way is financially. If you and your spouse co-own it, things can get messy. However, if they don’t have ownership rights but supported you throughout your journey to start the business, they might still be entitled to a portion of the business.

This doesn’t mean your spouse would become a co-owner. Instead, it means they might receive a portion of the value of the business. That could cause your business to take a financial hit.

Daily operations could also be affected by your divorce. If you’re the one solely in charge, your business might slow down when you have to take time away from the company to go to court.

How can you protect your business?

The best way to protect your business during a divorce is to have a prenuptial or postnuptial agreement. If you started the company before you got married, a prenuptial agreement would protect it by outlining that only you would have access to it and its value in the event of a divorce.

A postnuptial agreement works in much the same way, only it’s formed after the marriage has already taken place.

If you founded your business long before you got married, the court would likely see it as being yours alone. Your spouse might not be entitled to anything related to the company as part of your divorce settlement, which could bring you great relief.

Divorce is stressful, but it’s even more so when you own a business. You’ll probably want to learn all the options for protecting it.