When California business owners decide to divorce, they may be worried about the effect that the end of their marriage will have on their entrepreneurial interests. It may be particularly important for them to develop special protections in order to ensure that they, and others involved in their business, will not face massive upheavals as the result of a divorce. This is especially true for business owners seeking outside investments in the company, as venture capitalists and others may require safeguards.
In many cases, both spouses are involved in building the business and, thus, have a right to share in its value. However, making a plan does not mean depriving the other spouse of his or her rightful interests. What it does mean is that the business itself can remain intact despite marital upheaval. A prenuptial or post-nuptial agreement may address how the business will be handled in a divorce.
There are different ways that people can deal with their business interests through this type of contract. For example, a prenup could specify that the business is separate property.It could also specify that post-marital growth in the value of the business will be considered community property, but the division of funds will come from other property rather than from the business itself. Alternately, a specific percentage of the business’ value could be assigned to the less-involved spouse. Of course, this path is more complicated when both parties are full partners in the business.
There are a number of options that business owners can pursue in order to protect themselves and their company in case of a divorce. A family law attorney could consult with an entrepreneur about how to handle the business and other issues involved in property division.