The Law Offices of James A. Cuddy, LLC

Safeguarding a business during an owner's divorce

Many Connecticut residents have put their hearts and souls into building a successful business. Some have also worked hard to build a personal life that is equally successful, but have not been as lucky in love as they were in the business world. When divorce is on the horizon, many business owners wish that they had taken more aggressive action to safeguard their business from division during divorce.

The most powerful tool to protect business interests during divorce is the creation of a prenuptial agreement. These documents clearly state that manner in which assets will be divided in the event of a divorce. The power of a prenup lies in the fact that the document demonstrates that both parties were in agreement on the matter prior to entering into marriage.

If a prenup was not in place at the time of marriage, a similar level of protection can be obtained by a postnuptial agreement. These documents are heavily scrutinized by the courts, however, making it imperative that the paperwork is all in proper order. Both spouses should also retain their own legal counsel in order to fully understand the provisions within a postnuptial agreement.

Another way to safeguard against losses during divorce is to take steps to maintain a strict division between business and marital assets. This means that there should be no commingling of funds. Business assets should not be used for personal needs, and marital funds should not be invested in the business. Keeping these funds separate can help support a legal argument that they should be considered separately during divorce, as well.

For those in Connecticut who are concerned about how to protect their business from losses during divorce, it is important to sit down with a divorce attorney to review the available options. Each set of circumstances are unique, but there is a legal strategy to meet the needs of virtually every business owner. As with any significant financial matter, being fully informed is the best way to move forward.

Source: bizjournals.com, "How to protect your business in a divorce", Patrick Yeatts, March 25, 2015

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The Law Offices of James A. Cuddy, LLC
525 Bridgeport Avenue, Suite 201 Shelton, CT 06484
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