Business owners in Connecticut may be surprised about how filing for a divorce could potentially affect their company. While many may not expect that their marriage is heading into trouble, it may be best to take the necessary precautions beforehand to ensure that any financial assets are protected should a divorce be in the future.
Some experts recommend that business owners should not withdraw money out of their personal accounts in order to fund business needs; keeping personal and business accounts separate from each other might make the division of assets easier in the future. Owners should also keep good records of their business transactions. It is also a good idea to get a court-appointed professional who can provide a fair valuation on the company and then hire another party to review that estimation before acknowledging it. This could prevent an ex-spouse from projecting an unfair valuation that takes several years of future growth into estimation, rather than the current earnings of the company.
Typically, both spouses’ assets would be added up and then divided in a divorce settlement; to buffer a business from being added into the equation, it may be best to forfeit other assets, such as cars, the house or a retirement account. This could help to retain complete ownership.
If the court orders that payments need to be made to an ex-spouse for part of the company over time, the payments can be deducted from a bank loan or the company’s cash flow each month. If necessary, recovering capital could be as easy as selling a small stake in the company to employees through a stock ownership plan. A divorce can be a complicated event, especially when trying to understand the legal aspects associated with it. A divorce attorney may be able to assist in determining the best ways to keep the company safeguarded.
Source: Entrepreneur , “How to Divorce-Proof Your Company“, Carol Tice, August 08, 2011
