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Can I protect my business in case of a divorce?

Last week, we discussed how Chris Rock has filed for a divorce from his wife of almost two decades. Now, Rock and his wife will have to deal with splitting assets and handling child custody issues. That post might have some of our Texas readers wondering what they can do to keep their business assets protected during a divorce.

Should I pay myself a salary?

You should pay yourself a good salary when you own a business. This will help you protect your business in the long run because you can contribute to the family's finances without making the family live on a bare bones budget as you grow the business. In the event of a divorce, your spouse might be able to claim a good portion of the company based on lack of support for the family while you were working.

Should my spouse work for the company?

That is a slippery slope. There is a chance that if your spouse has a prominent spot in the company, he or she could say that the success of the company was due at least in part to his or her contribution. In that case, your spouse might say that he or she is due some of the profits from the company's growth.

Are records important?

Keeping financial records is very important. You should keep all finances separate. Ensure you keep good records of the finances for the company and the finances for the business.

Other ways you can keep your business protected are to get a prenuptial agreement or a postnuptial agreement signed. You might also be able to put the business in a trust to help keep it protected. Working with someone familiar with divorce and business assets might help you to determine what steps to take to keep your company protected.

Source: Entrepreneur, "How to Divorce-Proof Your Company" Carol Tice, Jan. 05, 2015

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