Many Virginia residents may not realize that the best way to protect one’s business from property division in a divorce is to act before one establishes the business or when things are going well between the couple. Even when one’s marriage is falling apart, it possible to take a strategy in place that prevents the breakdown from affecting the business.
The best way to protect all of one’s assets in a divorce is by entering into a prenuptial agreement. Increasingly, women need to protect their business interests. Compared to 10 years ago, women are 38% more likely to own their business, and as they marry when older, they are more likely to enter a marriage with more assets and property. In fact, either partner can benefit from taking steps to protect their personal and business assets from harm by entering into a prenuptial agreement. If entering into discussions about the end of the union before it even begins is daunting for some, they can enter into a post-nuptial agreement later on in the marriage as well.
The prenuptial agreement should discuss matters such as the value added to the business. For example, the wedding date can be the initiating period for adding value to the business and a spouse’s share in the business can be restricted so that future earnings do not have to be divided equally. It is also possible to categorize the business as separate property, which means it could not be divided in a divorce. It is also possible to identify ways the company could be split up, such as one partner buying out the other.
Setting clear boundaries, such as identifying which funds are used for which aspects of the business is a great way to avoid entangling funds and subjecting one’s business to property division. Knowledgeable attorneys can help draft prenuptial or postnuptial agreements outlining property division in the event of a divorce that can protect one’s beloved business.