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How can I divorce-proof my business?

On Behalf of | Dec 23, 2019 | Firm News

If you own a business in Iowa and start divorce proceedings, you could be at risk of losing your business. The court will consider many aspects of the business to determine if it is marital property. If it is, then it is subject to division between you and your spouse. This could put the business at risk and leave you without any way to save it. This is why you must plan ahead. 

Forbes explains the easiest way to divorce-proof your business is through a prenuptial agreement. However, the situation may be one where that is not possible. Perhaps you are already in a marriage, so it is too late, or maybe you did not start the business until after your marriage. In any case, all is not lost if you do not have a prenuptial agreement. 

You should start by getting your records in order. You need to show where the capital came from to start the business. You want to show where the money comes from to pay for business expenses. Always keep personal and business finances separate. Establish yourself as the owner. In the documents establishing your business include that it is nontransferable in a divorce. Treat your spouse like an employee. 

Setting clear boundaries and showing that you alone run the business will help to better set the stage for court when the judge is looking at whether it is martial property or not. The more you show that it is independent of your marriage, the better off you will be. This information is for education and is not legal advice.