How to Protect Your Family Business During a Divorce?
You may have noticed that one of the largest headlines this year in business news was the divorce of Jeff and MacKenzie Bezos. After a 25 year marriage, the Amazon founder and CEO recently agreed on a divorce settlement. The total settlement comes in at a whopping 38 billion dollars (roughly a 4% stake in Amazon’s shares) making it the largest division of marital property and assets in recorded history. Business owners all around the nation should look at this situation and consider how their business may be affected should they ever be faced with a divorce.
If you are a local or family-owned business owner you are used to looking at several factors that affect the overall success of your business. From analyzing risk variables to keeping tabs on competitors, to stay up to date with the latest technology. Despite all these vigilant efforts, local businesses are often not as protected as they should be. In many cases, couples who own a family business may have begun their relationship when they were young. During this time the business may not have been worth much initially. As the business grows however it is not uncommon for people to have a large portion of their net worth invested and tied up into the company. As a result, it can be quite tricky to reach a fair settlement with cash-on-hand or readily available.
How to protect the business
For many people, their family business is going to be the biggest personal asset for either partner. If you have not done so, you should speak with a family law attorney about options you can take to protect the business. This will help avoid unfortunate situations like the business going into large amounts of debt, or having to be sold as a result of the legal separation. One option that may be applicable to your situation is a prenuptial agreement. This is especially true if the business was started before you got married. This document requires full disclosure by both spouses and cannot be “unconscionable.” For example, even if you have a prenup, you cannot walk away with millions and your ex-spouse just gets a few kitchen appliances.
Consider a trust for generational wealth
Another option to help make a business more “divorce-proof” is to use trust funds. This is used to help protect family assets for a longer-term and involves using a trust shield to help protect future generations incase the current generation goes through a divorce. If a person has a trust fund and goes through a divorce, these funds are generally not accessible for the other spouse to have any claim to.
These are just a few ideas. The goal of this article is to have people thinking about what could happen in the future. Along with these ideas you can consider obtaining a new partner to help alleviate the pressures of a divorce. In ideal situations, you are able to still own and operate the business with your ex-spouse even if you are no longer married. If you have not yet spoken with an attorney about your business you should consider calling a family law attorney today. If you live in Utah consider contacting Burton Family Attorneys at (801) 393-1106 to speak with a legal professional and schedule a consultation.
Disclaimer: Using this site or communicating with Burton Family Attorneys through this site does not form an attorney/client relationship. This site is legal advertising only. Do not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services providers. If you have any specific questions about any legal matter, you should consult your attorney or professional legal services, providers.