It may seem hard to believe, but figures show that the national average divorce rate for first marriages currently sits at a whopping 52 percent, while the national average divorce rate for subsequent marriages sits at an astounding 70-plus percent.
As a married person, these figures probably seem somewhat discouraging. However, as a married person in business with your spouse, these figures probably seem absolutely alarming.
That’s because when you and your spouse are in business together, a divorce will likely mean more than just settling matters like property division, child custody, alimony and child support. Specifically, it will likely mean finding answers as to how you and your soon-to-be ex-spouse want to manage your business going forward.
Will you continue on as before, recognizing that it’s in both of your interests to keep the business growing and generating income? Will you sell the business or at least your interest in it? Will you do everything in your power to force a liquidation sale?
In light of these potentially difficult considerations, experts recommend that soon-to-be-married couples planning to enter business together consider taking a simple step to help ensure that a divorce will not spell the end of the business.
Specifically, experts recommend that couples consider executing a prenuptial agreement, which is a legally binding document that clearly spells out the rights and expectations of each spouse, and defines what will transpire in the event of divorce. Here, the prenuptial agreement could establish that the business belongs entirely to one spouse or that one spouse will buy out the other in the event of a divorce.
It’s important to note that this option isn’t necessarily reserved just for soon-to-be married couples. Indeed, married couples who start a business later in life can execute a postnuptial agreement, a legally binding instrument that functions almost exactly like a prenuptial agreement.
It must be noted that those couples who are in business together and, who have not executed either a prenup or postnup, still have viable options in the event of a divorce. An experienced legal professional can outline these options, explain the law and fight to protect their best interests.
Source: The Business Journals, “How to divorce-proof your business,” Rosemary Frank, March 2, 2014
