If you own a business, one of the most important things you need to do is protect it. You need to keep it out of your spouse’s hands, which could happen in the event of a divorce. Colorado is an equitable distribution state, which means in a divorce all marital assets are split fairly. If you formed your business after marriage, it could be at risk in a divorce unless you have some protections in place. Even if you formed it before your marriage, any increase in the value of the business since then is a marital asset.
Indeed, if you have a business, you will want to take the appropriate steps to protect it. Your business may be your most valuable asset in a divorce. If your spouse gets a share of it, they could gain control of it. They could destroy its operations for good, causing it to shut down. This is the last thing you want to happen.
The good news is you can protect your business with careful planning — but you need to think ahead. Here are some protections to consider.
Have a Marital Agreement in Place
The only way to avoid the state law of equitable distribution is to have a marital agreement in place. A prenuptial agreement is a good option if you owned the business before marriage. If you are already married, a postnuptial agreement will also protect it. This legal document will outline what will happen to your business and other assets. You can decide to keep 100% of your business, for example, and offer your spouse other assets in exchange.
Use Other Assets as Negotiation
Even if you do not have a prenuptial or postnuptial agreement in place, you can still negotiate on the assets. Not every asset is necessarily split 50/50. Instead, one spouse may retain full ownership of some assets while the other spouse keeps other assets. If your main priority is protecting and retaining your business, then you may be able to sacrifice other assets, such as the marital home or retirement assets.
Contact Us Today
In a divorce, the business is the most at risk. Take the steps above to protect it so your spouse is entitled to less of it once your marriage ends.
The team at Tanis McGonegal Family Law, P.C. can help you through the most complex divorce matters. We know the best ways to protect your business. To schedule a consultation with our Colorado divorce lawyers, fill out the online form or call (303) 465-4605.