Divorces present major problems for couples in West Virginia who also operate a business. Successful business owners commonly want to continue their operation, but in a different ownership structure. This means that proactive steps must be taken in some manner, ranging from maintaining a proportional ownership relationship with an ex-spouse to completely purchasing the company in a total separation.
Separate your finances
The best method of protecting a business is making it as independent as possible from other family finances. If a home is collateral for a business loan, the divorce can be complicated. Additionally, an independent bank account for the business is vital as well. The business should have no strings attached financially on the day a divorce is filed because the date becomes an ownership benchmark for dividing property.
Reduce business value
The issue of property division is a central aspect of most divorces when a couple has significant assets, including a business. The lower the value of a business, the less one party will need to pay the other for complete control of the business.
Sell a portion of the business
Another option is selling a percentage of the business to raise cash for a buy out of the other spouse, or pay them in accordance with their ownership percentage. This option can work better with some businesses as opposed to others, but it can be accomplished, including selling stock in some instances. Changing the formal business structure may be necessary too, such as transitioning from a partnership to a sole proprietorship.
Preparing for a divorce financially is important for all couples with significant personal assets, and maintaining a viable family business is often the most important aspect for many. Life goes on after the fact, and a business may be what actually allows that to happen successfully.