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3 ways to protect your business from divorce

On your wedding day, the last thing you want to acknowledge is the possibility of divorce. Unfortunately, for many couples, their happily-ever-afters do not include their spouses. In many cases, it is impossible to know this when you say "I do." However, this does not mean you should not take precautions in case it does happen. This is especially true if you have your own business in Canton.

Property division in a divorce can seriously impact your company if you do not take the necessary steps to put protections in place. For some ways you can guard your business from the effects of divorce, read further.

Organization type matters

One of the key ways that you can protect your business in case of divorce is to choose the right kind of organization type. For example, Limited Liability Companies (LLC) and Corporations often come with safeguards in place that limit your company's exposure to divorce. If you choose an LLC for your business formation, then you can draft an operating agreement that stipulates the business's decision-making process and potentially shield it from the worst-case scenario of marital property division. By setting up your business as an LLC or corporation, you essentially create an entity that is separate from your personal assets, like the house, cars and real estate you and your wife own.

Set up a trust

Another option is to set up a trust to take the position of company owner. This legal structure works in similar way as the LLC and corporation options in that it allows the company to operate and own assets as a separate entity. However, if you decide to go this route, be sure all the trust creation documents are in order as even a simple mistake can expose your company.

Draft a prenup

Before you walk down the aisle, you can draft a prenuptial agreement that limits your future wife from being able to claim a substantial portion of your business as part of a divorce settlement. As long as the marital agreement meets all legal requirements and is not skewed to favor one spouse to the detriment of the other, divorce courts will generally uphold them.

If you own a business and you are thinking about marriage or you are married and thinking about divorce, it is important to take steps to protect your company and ensure that it can withstand a possible split with your spouse. The above tips can provide your company with the protection it needs to continue operations even if you divorce.

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