Avoid the forced sale of your business due to a divorce
Did you know a divorce judge can order you to sell your business... and force you to comply?
You've worked hard to build your business, sacrificing untold hours and enduring stress, and you've made it... your company is a success! You're a standout and a role model for other women business owners in a nation where fewer than three percent of women-owned businesses gross a million dollars or more.
And yet divorce proceedings can all too easily put the existence of your business at risk... whether your husband was involved in the company or not, and regardless of who initiated the divorce.
It can seem incredibly unfair, but if your business grew in value while you were married, the amount of increased value must be included in the pot of marital assets to be divided between you and your husband. It doesn't matter who operated the business or how it's titled. Regardless of the judge's sympathies for your position, she's legally obligated to ensure the percentage of marital assets owed to your husband is paid. If your marriage's other financial assets cannot meet that obligation, the money resulting from the sale of your business—usually at fire sale prices, due to court-ordered deadlines—will help make up the difference. Because a privately owned business is often the most valuable asset of its owners, this is all too common.
Your husband's role in your business can also force its sale, even if your marriage has assets sufficient to meet his court-ordered portion. If he's a business partner or is entitled to an ownership interest as ordered by the divorce judge, you may want the unilateralUndertaken or done by only one side or party; not mutual right to buy out his share—particularly if you'd rather not have your ex-husband and his future wife as business partners. To do so, you might use your share of other marital assets or propose a long-term payout with interest. If your business represents the vast majority of your marital assets, though, there may be no other way to buy him out than to sell the company and divide the proceeds.
How to protect your business from a possible divorce
Steps to take if you're not married... or if you're happily married
It may seem strange to consider the potential impact of divorce when you're single or there's no divorce in sight, but divorce-proofing your business is an important part of your financial plan as a woman business owner, even if you never have to use it. If you ever do, you'll be so glad you protected your company—just as you'd be incredibly relieved you insured your home before a storm leveled it.
In both cases, you fervently hope your protective actions are never needed, but it's still wise to insure against the possibility of disaster—which by its nature is usually unforeseen. By the time it's in sight, it's usually too late to do anything but grit your teeth and hope for the best... not a position anyone wants to be in.
What is divorce-proofing?
Divorce-proofing is our proven two-step process: first, we analyze the potential business risks you and your company might face in the event of a future divorce. Second, we recommend immediate steps you can take to guard against those risks, setting you up to confront any possible divorce in the strongest financial and ownership position possible.
It's well worth investing a small amount now to avoid tremendous loss and additional heartache later—even if a divorce never occurs. If it turns out divorce isn't in the cards for you, everyone wins: you and your business will still benefit from your strengthened financial position, and you and your significant other will enjoy the opportunity to spend many happy years or decades together.
Contact us to begin divorce-proofing your business. We'll meet with you to explore your current personal and business situation, conduct a thorough review of your business and financial documents—including any pre- or post-nuptial agreements, operating agreements, partnership or shareholder contracts, or buy/sell documents that may be in place—and assess your assets, liabilities and ownership status in a variety of areas. (We'll meet with you in person if you're in the New York City area; if not, or if you prefer otherwise, we can meet by phone or via email.) Next, we'll follow up to address any questions or clarify any issues uncovered during our analysis.
Once our analysis is complete, you'll receive the following:
- A detailed report in writing, tailored to your unique situation
- Specific recommendations as to what steps you should take— expert guidance that assumes your marriage will be lifelong but protects you and your business in the event it isn't
- For any recommendation we can't help you carry out, we'll provide a referral to a qualified, ethical professional; for instance, if we recommend a particular legal agreement, we'll suggest an excellent attorney who can provide it for you.
While women business owners nearly always have dozens of priorities clamoring for attention, the sooner you begin the divorce-proofing process, the stronger your position is likely to be. Get it done now, and you'll have yourself to thank later.
How to protect your business during a divorce
Steps to take if your divorce is beginning or has already begun
You didn't expect a divorce. Now suddenly you're running to catch up, juggling the stress, sadness, and details of the divorce while trying to keep other balls in the air. You may worry your company will have to be sold or that operations will be disrupted—a valid concern, especially if your husband is involved in the business. If you're the higher earning spouse, meanwhile, you may wonder if you'll have to pay alimony or give up other assets, even if you didn't want the divorce.
Though it may be too late for divorce-proofing, there are steps you can take to protect yourself and your business.
As a successful business owner, you're accustomed to working with a top-notch team of professional advisors who support you and your company: your CPA, banker, attorney and others. Now it's time to add a divorce financial advisor to that mix-a role different than the one typical financial advisors play, requiring specific divorce-related expertise.
As your Divorce Financial Strategist™ (a Certified Divorce Financial Analyst [CDFA™] with advanced training in asset protection and divorce financial planning strategies), we'll work with your existing team and your divorce attorney to shore up your financial and ownership position, taking the best possible steps to boost your chances of coming through the divorce financially sound and in control of an undisrupted business.
We'll take care of the critical financial tasks that are beyond the scope of your regular team, including projecting the financial implications of different divorce settlement options, taking into account not just divorce-related financial issues but potential impacts on your business, and providing you with the advantages and disadvantages of each one. Is your spouse pressuring you to sign an agreement based on a bluff? You're not the type to fall for that—and with us on your team, you won't have to.
You do have one thing in common with the woman business owner who isn't facing a divorce: it's better to call in expert assistance sooner than later. Many of a woman's worst financial decisions are made during divorce proceedings, often due to a lack of financial divorce-related knowledge. That expertise is what we bring to the table... in support of you and your business.
We work with women business owners across the United States. Contact us today. Your inquiry will be kept absolutely confidential.