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Steps to prevent losing your business in a high asset divorce

Any Massachusetts resident who has worked hard to build a successful business may be devastated if a spouse takes half of it in a divorce. For that reason, measures are typically taken to protect such an asset -- especially in a high asset divorce. Although not watertight, a prenuptial agreement could provide the necessary protection if one spouse owned the business before the marriage.

However, if the other spouse had a vital role in the organization or provided finance for it at some stage, the court may determine that the ex owns part of the business despite what the prenup states. For further protection of the company, it may help not to commingle business and personal expenses -- in fact, it might be best to prevent that spouse from providing finance or play any part in the business. Keep in mind though, that if the ex gave up a career to care for the kids and the home, he or she might still be entitled to a percentage of the company.

To maintain ownership of the business, other assets may be sacrificed to make up a spouse's share. After obtaining a fair business valuation, the owner could forfeit real estate, collectibles, automobiles, retirement accounts and more to make up the other spouse's share of other assets in place of a share in the business. It might be possible to come to an agreement to pay the ex his or her share of the company over a specified period from business funds or a bank loan taken out for that purpose.

Business owners may want to be proactive and do what is possible to legally protect a business before there are even thoughts of a divorce. The most appropriate step to take may be to consult with an attorney who is experienced in handling any high asset divorce in Massachusetts. A lawyer could play a major role in protecting a business owner's assets even before the marriage by drafting a prenuptial agreement that may provide maximum protection.

Source: tgdaily.com, "3 Ways to Protect Your Business from Divorce", Ian Reading, Accessed on May 26, 2017

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