Some couples stave off divorce for the sake of the kids. But when couples co-own businesses together, making the decision to split can be just as emotionally fraught because they are economically yoked to the same income stream.
It might not be just the financial ties that bind. It’s possible that the parties are both emotionally invested in the success of the enterprise. Neither wants to walk away from it or step down from the day-to-day management of its operations.
What happens then?
Several scenarios can play out. Of course, it’s always better if the couple has a prenuptial agreement in place in the event of divorce. But some fail to provide for this contingency. However, at any point after the marriage, the spouses are free to enter into a postnuptial agreement that dictates who gets what in a split.
Your next option is to avoid commingling business and marital assets and resources. Doing this makes it harder to delineate which are part of the marital property and which are owned solely by the business.
Trusts are also ideal for preserving business assets in a divorce. Establishing a trust for your business effectively alters it from a marital asset into part of the family trust. You and your children can then be its beneficiaries.
If none of the above groundwork has been laid, it may still be possible to negotiate for a bigger slice of the business pie — or even the whole thing.
You may want to consider trading your interest in the family home or a larger portion of a retirement pension or IRA for your spouse’s share of the business. You can strategize with your legal adviser about the best way to achieve your aims.