Q: How Do I Protect My Business Through a Divorce?
A: Going through a divorce can be a challenging experience, especially for business owners. In New Hampshire, the division of assets under RSA 458: 16 includes any family or small business, which can significantly impact both your personal and professional life. Here are some strategies to help safeguard your business during a divorce.
Understand the Division of your Assets
In New Hampshire, all assets owned either jointly or individually may be subject to division by the Family Court. This means that the value of any assets acquired before or during the marriage, including a business, may be divided between spouses. The Court, however, strongly discourages joint ownership or management of a family-owned business after a divorce. Therefore, only one party likely will be awarded the business with the other party receiving other assets or time payments from the business to compensate them for their interest.
Consider a Prenuptial or Postnuptial Agreement
If you’re married or contemplating marriage, a prenuptial or postnuptial agreement can be an effective way to protect your business by classifying this asset as “separate property”, outside of the marital estate. These agreements can specify how the business will be treated in the event of a divorce, thereby minimizing disputes later on. While these agreements must be fair and entered into voluntarily, they can provide clarity and security regarding asset division.
Get a Professional Business Valuation
Engaging a professional appraiser can help determine the fair market value of your business. This is critical not only for an equitable division but also for ensuring that you receive a fair settlement. A proper valuation can help identify the business’s fair market value, which is the standard applied by the Court.
Develop a Business Continuity Plan
Divorce can lead to operational disruptions, so having a continuity plan in place is vital. This plan should outline how the business will function during and after the divorce process. It may include strategies for managing finances, employee relations, and customer communication to maintain stability during this transitional period. Any plan should include a full and on-going disclosure of the business finances.
Seek Legal Guidance
Navigating the complexities of divorce and business ownership requires expert guidance. Consulting with a family law attorney who understands New Hampshire’s specific laws can provide valuable insights. An attorney can help you understand your rights, negotiate effectively, and develop a strategy tailored to your situation.
Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.