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How to protect your business during a divorce

On Behalf of | May 10, 2022 | Divorce

If you operate a business in the state of Tennessee, you need to protect it. This is particularly true when you are in the midst of a divorce. If your marriage should come to an end, you need to make sure your livelihood doesn’t go with it.

Protect your business with a prenuptial agreement

The process of divorce can have a wide range of negative effects on your business. One of the best things you can do to make things easier is to draw up a prenuptial agreement that protects your business. The first thing you need to settle is if the business is considered joint marital property or only your own.

You’ll do a lot better during a divorce if you can manage to keep the business separate from your marriage and in your own name. You can stipulate this in your prenup. If this isn’t possible, you can at least draw up an asset-sharing arrangement. This may mitigate the worst aspects of division when you divorce.

Always keep your finances separate

The worst thing you can ever do is to mix up your personal with your business finances. Doing so is just begging to be taken to the cleaners. A high asset divorce could set you back years or even decades. Never use your business as any kind of collateral for a home or your home as collateral for your business. Keeping them separate minimizes your loss.

Remember to pay yourself a salary

Many business owners forego paying themselves a salary or only take a very tiny one. This is to ensure that they can remain in a state of liquidity. But this caution can backfire on you during a divorce.

The less you take out on salary, the more there is to distribute to your former spouse. The more you take out via salary, the less you can lose. This will help keep the amount of the settlement you may have to pay much lower.

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