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How a divorce might impact your business

On Behalf of | Apr 6, 2023 | Family Law

If your marriage comes to an end, it’s possible that you will have to cede control of key assets such as your Virginia company. Even if you are allowed to retain majority ownership of your business, a divorce may still have a negative impact on its performance. However, there may be steps that you can take to minimize the damage that events in your personal life might have on your firm.

Be proactive

It may be possible to shield your company from a divorce settlement by putting it into a trust. Generally speaking, assets that are held in a trust are considered to be outside of the marital estate. You may also consider buying an insurance policy that would pay any amount that you spouse is awarded in a settlement. Finally, putting a buy/sell agreement in place may limit who can own an equity position in the firm in the event of a divorce.

Think about your employees

A contested divorce may negatively impact your ability to make decisions that are best for your company. This may result in a drop in shareholder confidence or other consequences that might impact your brand’s value. Furthermore, rumors of a possible takeover following your divorce may have employees asking questions about their futures. Ideally, you will be as transparent as you can about what you are going through and what you are doing to protect your company and its workers.

Regardless of how amicable a divorce may be, it has the potential to cause turmoil for your business. However, the use of a prenuptial agreement or other preemptive tactics may enable you to negotiate an equitable settlement without the need to sell or step down from your company.