Can Your Small Business Survive Divorce? 3 Possible Strategies For You To Consider

While divorce can be hard on everyone involved, when you have a small business at stake, the situation can get very complicated. Especially if the business belonged to either you or your spouse prior to the marriage and even more so if both contributed to the success of the business during the marriage. The business should be able to survive your divorce, but only if you (both) proceed carefully and seek experienced legal guidance along the way.

1. A Postnuptial Agreement 

If your marriage isn't ending with hostility and venom, a divorce lawyer can advise you on the benefits of a postnuptial agreement for your small business. This document must be drawn up cooperatively between you and your spouse, with both parties participating voluntarily and fully disclosing all of the assets there are to divide. A postnuptial must also comply with the laws governing your state and generally include the following:

• Specifiy how you're dividing assets
• How debt will be handled
• Who will handle responsibilities associated with the day-to-day operation of the small business
• Other marital details, like spousal support, may be included, depending on your circumstances

This type of agreement could work to solve problems surrounding your small business during a divorce, but most likely only if neither you or your spouse are contesting the marriage or disputing aspects of the divorce.  

2. Arguing Separate Property

If the small business was conceived, incorporated and built by only one of you, that person may argue it's separate property and not marital, meaning they're wholly in ownership of it. Claiming separate property can be sticky, since most marriages involve support and sacrifices made by both parties and in various forms. Therefore, if you're the one claiming separate property and your spouse contributed in any way to the business, including simply supporting you, not just financially, but in terms of supervising the children while you worked or making car payments on the vehicle you drove to get to the business, for example, they may have legal claims to the company.

Your divorce lawyer will help you understand whether the small business can be claimed as yours exclusively, along with how you can go about maintaining your control over it if at all legally possible.

3. Running The Business Together

Especially if you and your soon-to-be-ex-spouse aren't able to reach an agreement in terms of dividing the small business, consider the possibility of continuing to operate it together, only as legal and not marital partners. Your spouse, if they helped to build the business during your marriage, is most likely entitled to some of it anyway, so why not attempt to amicably keep moving the company forward? Decide who is responsible for what, including vacations and watching the children, and hammer out salary issues together. Your divorce lawyer can handle the rest, working out legal terms and paperwork that would bind the two of you to your mutual agreements. 

Don't automatically assume the small business you run gets the axe during your divorce. Whether it was always yours, belonged to your spouse and you contributed, or vice-versa, laws exist to protect such arrangements, and an attorney can help you figure out how to apply those laws to your individual circumstances.