One of the most significant assets many high-wealth couples in the Federal Way area have is their businesses. If you own a company and are currently engaged or getting ready to propose to your significant other, you should consider the possibility of divorce and its possible impact on your business.
It is not easy dividing up marital assets, and when there are business assets involved, things can become more challenging to split. To avoid issues if you and your future spouse were to part ways, consider the following ways to protect your business.
1. Get a prenup
You and your fiancé may be head over heels in love with each other now, but you should not count on those feelings to look out for you in a divorce. Money is a powerful motivator and tool that high-value couples use to get the upper hand in their separations. Spare yourself the drama and ask your partner to sign a prenuptial agreement.
Many individuals think prenups are unromantic and unnecessary. They might not realize that prenuptial contracts can help to strengthen the bond, trust and respect they have for their partners. They can provide for their future spouses by dictating what financial responsibilities and other obligations they will provide if their relationships do not work out. Prenuptial agreements can add stability and a deeper sense of security as well as keep the drama and delays out of potential divorce proceedings.
2. Form an LLC
Different business types affect how you will pay your taxes, but opting for a limited liability company allows you to separate your personal life from your business. However, keep in mind that comingling marital assets with business assets could still result in your spouse receiving a share of the company in a divorce.
3. Create a trust
Many people think of a trust as an estate planning tool, but when you create one, you are actually creating a separate entity and transferring assets to the ownership of that entity. If the trust owns your company, it may be protected from your spouse in a divorce.