People who own a Connecticut business may be concerned about how to protect it in a divorce. Some people might choose to create a prenuptial agreement that makes the business separate property, or it might name a certain amount the spouse will receive. Couples who own a business together may want a prenup in which they agree to continue operating the venture even if they get a divorce or in which one agrees to buy out the other. A post-marital agreement can serve a similar function if the couple is already married.
Another option is to establish in the company’s organizing documents that the business is separate property that cannot be transferred in the divorce. It is important to keep records about how the business was funded since using marital resources to start it may mean the spouse has a greater claim on it. Similarly, a spouse who does any work for the company should be paid fairly to avoid a claim that the division should be more equitable to account for that.
Cash transactions and business expenses, as separate from personal ones, should be carefully tracked. Business owners who pay themselves a salary that is under market value should be aware that support payments might be calculated as though the person is paid the full market value.
Business owners who are considering a divorce might want to talk to an attorney about how the process might unfold and whether their business is adequately protected. A prenuptial agreement is not always a guarantee against having to divide a business since if it is prepared improperly or a party did not fully understand the agreement, it could be challenged. Real estate, retirement accounts and other investments could add another layer of complexity to property division.
