If you’re getting a divorce in Colorado and own a business, it can make the situation even more complex and overwhelming. Being in this position can make it challenging to focus as you will be dealing with lawyers and the splitting of assets.
The consequences of divorcing when you own a business
One of the most significant consequences of divorce is usually the financial hit it can have on your bank account. Adding a business into the equation means you’ll have to determine a fair split of your assets and income from this entity. The court system will decide since you don’t live in a community property state. However, if you are both involved in its operations and ownership, creating an equitable solution can be challenging.
Distributing assets when you own a business and are getting divorced may require creative problem-solving. Making payments over time is an option if you and your spouse can come to an agreement. This action might involve garnishing your wages, but it could be worth it if you keep your business interest protected. You may also arrange to sell your stake in the business with an agreement to buy it back later.
If you own a home together, this might be used as a way to keep the business intact if you agree to give up your share. For example, one spouse may take the house while the other takes the business.
Selling the business may be required if you get a divorce and both you have an interest in its operations. While this can be drastic, it may be the only answer.
If you haven’t gotten married yet but your relationship is headed that way, it may be a good idea to draw up a prenuptial agreement. Presenting an acceptable situation for your business’ ownership just in case can be a wise financial move.
If you are already married and your business is starting to take off, it may be a good idea to set up a trust for the business. This removes the business from your ownership and allows it to stay protected if you get divorced. Of course, a post-nuptial agreement is always an option.
Understanding your options when you own a business and get divorced can be critical.