How Business Owners Can Protect Themselves from a Divorce
If you are a business owner, you should know that a divorce can hurt you financially if certain precautions are not taken. To protect yourself and your business, be sure to follow these seven useful tips.
1. Design a Prenuptial Agreement
Before you get married, work with a family law attorney to create a prenuptial agreement that clearly outlines your business as a separate property. Keep in mind that a prenuptial agreement is a sound legal method to protect all of the hard work and sacrifice you have put into your business.
2. Arrange a Domestic Asset Protection Trust or DAPT
If you do not wish to draft a prenuptial agreement, consider setting up a DAPT. This protection strategy does not require your spouse’s approval and transfers company ownership into a trust. With a DAPT, you would legally own your business. Since this strategy may not work with all types of entities, speak to an attorney to determine if you qualify.
3. Separate Your Personal and Business Finances
One of the easiest and most effective ways for you to protect your business from a divorce is to keep your personal and business finance separate. This means you should never buy a vacation home or a family car as a business expense.
4. Do Not Mix Business and Pleasure
If possible, keep your spouse out of your business. In the event your spouse helps out with your business, they may receive a share of it in a divorce. You can protect business by not mixing business and pleasure.
5. Pay Yourself a Market Salary
Underpaying yourself can lead to issues if you get divorced. Therefore, it’s essential to pay yourself a fair salary that is right for the size of your business and your particular position.
6. Sacrifice Other Assets
Determine whether there are other assets you are willing to sacrifice. If you give up your house or car, your chances of retaining ownership of your business can increase.
7. Reach Out to a Financial Advisor
It is important to speak to a financial advisor if you are an entrepreneur going through a divorce. They can inform you of your options and assist you in reducing your taxes while maximizing your financial benefits.
Contact Our Lombard, IL Divorce Attorneys
If you are a business owner who would like to protect yourself in a divorce, contact our experienced Lombard, IL divorce lawyers. For a free, no-obligation consultation in English or Polish, call us at 630-953-3000.