Far too often, couples fail to plan for what will happen in the event of a divorce. There are a number of reasons for this, but taking proactive measures to protect your own interests is often viewed in a negative light. An impression may be formed that if you try to safeguard your business and assets, it shows that you do not trust or value your spouse. However, the opposite is usually the case.
Taking steps to protect your interests is generally of mutual benefit to your partner. Also, at some point during your marriage, you will need to talk about finances, so why not get off to an early start?
It is likely that you have invested a lot of time and money into getting your business off the ground, so it is something that is worth protecting. Outlined below are some measures you can take to protect your business from divorce.
Conscientious record keeping
Being lax about financial activities and documents could end up harming you in the long run. It is not uncommon for business owners to make petty cash transactions while neglecting to document them. Failing to stay on top of the cash components of your business could be to your detriment further down the line.
You should also be able to evidence how your business was financed. For example, did both you and your spouse both invest initially? Who covers the costs of your commercial lease? How are the day-to-day expenditures of your company managed?
Consider limiting your spouse’s involvement
If your spouse was not involved in establishing your business and has no plans to invest significant time or money, then it may be best to keep these aspects of your life completely separate. This can place you in the position of being able to show without doubt that you are the sole proprietor of your business. Ultimately, this will make it difficult for your spouse to argue that a share of the business should be transferred in the event of a divorce.
Protecting your business can benefit both you and your spouse. If you have no option other than to pursue a divorce, you should know that you are legally protected in California.