Real estate business

How to protect your real estate business during a divorce


Running a real estate business is hard enough on its own. Layering a divorce only serves to complicate your responsibilities and loyalties. If you are faced with a divorce situation, you must proceed with great tact.

Ways to protect your business before/during a wedding

Ideally, you should protect your real estate business before you get married (or at least while your marriage is in a safe place). Here are the ideal ways to do it:

Priority #1: Sign a prenuptial agreement. You want this marriage contract to designate your business as separate property and detach it from your marital assets. It is also important that the prenup be structured in a way that protects the appreciation or increase in value of the business.

Priority #2: Sign a postnuptial agreement. If you were unable to sign a prenup or started a business during your marriage, the best option is to sign a postnuptial agreement. This is usually much harder to do (unless your spouse is totally laid back and has a lot of their own assets and income).

Priority #3: Structure the business appropriately. If you’re starting a new business during your marriage, meet with a business lawyer to help you draft an agreement that includes provisions that explicitly state what will happen to the business if either owner divorces. Note: This will protect the business, even if it does not protect your interests in the business.

Ways to protect your business during a divorce

We are going to assume that you are reading this article because you have not preemptively protected your business and are now going through a divorce in which the business is at stake. In this case, there are several things you can do .

1. Don’t be irresponsible

When business owners feel threatened by divorce, they often tend to act recklessly, but it usually comes down to biting them. For example, if your spouse is currently an employee of the company, you might think it’s best to let them go. But this is a big mistake.

“You can’t just fire your spouse if they work for the company,” notes attorney Rowdy G. Williams. “You need to be extra careful about how you treat them during the divorce process. While hard to do, it’s best to keep your work and personal relationships totally separate.”

You should also avoid sabotaging the business for the purpose of upsetting your spouse or protecting assets. All books, records, and decisions you make during your divorce will be carefully reviewed by attorneys on both sides (as well as the divorce court). Poor or unethical decisions will come back to haunt you.

2. Hire an accountant

If you don’t already have one working for your business, now is a great time to hire an accountant. Your accountant will help you get your finances in order and make sure everything is done properly. Work with your accountant to gather and organize receipts, invoices, tax information, bank details, etc.

3. Hire a lawyer

You should hire a lawyer regardless of the circumstances of your divorce. However, it is especially important to involve one if there is a business interest involved. Work with a good lawyer who has experience handling divorces similar to yours. (You want to make sure they don’t cut their teeth at your expense.)

4. Focus on the business

Ultimately, you need to focus on the business and keep doing what’s best for the business. This is especially true if you have regular customers and/or employees. There are other people who depend on you. You owe it to them to continue to honor your part of these agreements.

The best thing you can do is keep growing the business and achieving your goals. Ultimately, this will put you and the company in an ideal position. Let’s just put it this way: it’s better to have a small part of a successful business than a larger part of a failed business.

Protect your business

Divorce is never desirable or practical. And it gets even more complex when there is a business and other related assets involved. Fortunately, there are things you can do to put yourself in a good position. Use this article as a guide moving forward.


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