Going through a divorce as a business owner is incredibly stressful. It’s fair to worry about whether your spouse could get their hands on the company and become a part owner. However, there are some things you can do to protect your Indiana business.
How a business is divided during divorce
Indiana is an equitable distribution state, which means that during a divorce, property and assets are divided fairly between spouses. This also applies to a business owned by one spouse if the company was formed during the marriage. If the business was founded prior to the marriage, it’s excused from property division.
The business itself is also not divided unless both spouses co-own it. Instead, its value is determined and the spouse who doesn’t have an interest in the company receives a percentage of that value.
Options for protecting your business during divorce
Forming a trust and placing the business in it could help protect it from property division. This is because it counts the business as being separate rather than marital property. You also have the option of forming a separate business entity like a corporation or LLC, which holds the assets.
If you had a prenuptial agreement created before you got married, you’re in good shape for protecting your business from your divorce. However, if you were unable to bring up the subject of a prenup before walking down the aisle, a postnuptial agreement is a good alternative. Either of these legal contracts protects your company from divorce as your spouse cannot get a portion of its value.
You can also protect your business from divorce by paying yourself a good salary. This allows you to prevent having to pay your spouse a hefty amount of money as part of the divorce settlement.
You can also sacrifice other assets to satisfy the division of assets and property in your divorce. It could help you retain your business and its value so that your spouse won’t even need to get anything from it.
Getting a divorce is stressful enough, but when you own a business, it’s even worse. These options allow you to breathe easily.
