If you’re getting divorced in Washington, it can be a stressful time in your life. Having a business involved in the ordeal can make it even more complicated. Whether you’re running a company or have a significant stake in its operations, ending your marriage could disrupt this element of your life due to living in a community property state.
Getting divorced can impact your business negatively
Going through a divorce can can wreak havoc on your business financially if you live in a community property state. With your marriage ending, you could lose 50% interest in your company.
Being a significant stakeholder can also make it challenging if you get divorced. Your status in the business could change due to having a high number of the shares you own diluted. Resolving the situation can be complicated if you’re legally forced to have your ex become a new partner.
Protecting yourself financially if you get divorced
If it isn’t too late and you want to ensure that your business is protected, you can draw up a prenup or postnuptial agreement. Doing so involves separating your finances or putting the business into a trust. Paying yourself a decent salary can also be advantageous if you get divorced as less funds will be available if you have to pay a significant amount toward a settlement.
What to do if you get divorced and own a business
Getting divorced without protecting your business can result in many negative changes. You may have to sell your business or sacrifice other assets to see if you can keep 100% of your company. Selling a stake of your business or making payment arrangements are other options you may need to initiate.
Planning ahead is one the best ways to help ensure that you can continue operations without being forced to sell or negotiate. You may be able to keep your business by separating its finances from your marriage as far in advance as possible.