If you are a Pennsylvania business owner who is getting divorced, items held inside of the marital estate will be split in an equitable fashion. This means that you may lose a portion of your company to your spouse, and depending on the facts in your particular case, you may lose the entire business. Let’s take a look at what you can do to minimize the risk of either scenario playing out.
Put the company into a trust
Placing the company in a trust will keep it outside of the marital estate. Therefore, it will no longer be subject to state property division laws. However, it’s worth noting that you will need to put the company in a trust long before divorce proceedings are initiated. Otherwise, a judge may invalidate the trust or otherwise rule that the firm is eligible to be divided in a final settlement.
Draw up a buy/sell agreement
A buy/sell agreement gives you a greater level of control over who is able to acquire your portion of the company. It also gives you a greater level of control as it relates to determining how much your share of the company is worth.
Buy an insurance policy
Instead of acquiring a stake in your business, your estranged spouse may be willing to accept a buyout as part of a divorce settlement. If you have a business insurance policy, the company that underwrites that policy may be the party responsible for paying them. Although it may cost more to acquire insurance in the future, it may be less costly than selling your business outright.
Your business may be one of the most valuable assets that you own, and it may also have the potential for significant future growth. Therefore, it is a good idea to take steps today to ensure that you can retain control of it after your divorce is final.