The possibility of divorce should be an integral part of your business financial planning – the survival of your business may depend on it. It is not just your own divorce you need to worry about, but the possibility that your business partner or an investor may divorce down the road putting your company at risk.
In community property states, including Wisconsin, all assets and liabilities, including those related to business ventures, are typically split 50-50 if they are acquired during the marriage. Equitable distribution states, on the other hand, will divide assets according to the marital circumstances, so spouses may be awarded different percentages.
Divorce and Business Ownership
Whatever the percentage, a business owner would have to come up with an equal cash value to give to his or her ex-spouse or they may be forced to sell part or all of the business to come up with the funds to satisfy the terms of a divorce settlement agreement. With nearly fifty percent of marriages ending in divorce, it is not wise to take a chance on losing your business so it is important to put agreements in place that will keep the company up and running in the event of a divorce.
The more detailed a prenuptial agreement is, the better. In order to achieve a fair settlement when there is a business involved, parties will need to know how much the business is worth. A prenuptial should include details on how the company will be valued and who will be responsible for the costs of a business valuation as they can run anywhere from 5 to 10K for smaller businesses, to as high as 30K for larger, more complex businesses.
A prenuptial or post nuptial agreement should provide clear details on how assets will be divided. There should also be a provision for an extended payout, to avoid the shock of a hefty, onetime payment to an ex-spouse that could send a company into a tailspin. Because a company will likely change over time, it is also important to include a requirement to update agreements periodically so that they make sense if and when a divorce occurs.
Divorce and Business Ownership Questions?
Contact an Experienced Wisconsin Business Valuation Divorce Attorney For Answers at 414-210-3135
There are many issues to consider if you have a business – having a clear idea of what will happen in the event of a divorce is just good business practice. If you would like more information regarding premarital agreements with regard to a business or if you are considering divorce with a business, it is very important to seek the help of an experienced complex marital property division and business valuation lawyer. Contact Probst Law Offices for more information regarding the division of marital assets and debts with a business.