Divorce can be a tumultuous process, especially when it involves a business.
For business owners in Massachusetts, protecting your enterprise during a divorce is of utmost importance and requires using different strategies.
1. Maintain thorough financial records
Clear and meticulous financial records are your best ally when navigating a divorce. Ensure you document all financial transactions related to your business. This includes income statements, balance sheets, tax returns and any other relevant financial documents.
2. Keep personal and business finances separate
Separating personal and business finances is not only a good practice for your business’s success but also for protecting it in the event of a divorce. Maintain distinct bank accounts and credit cards for your business, and avoid mingling personal funds with business assets. This separation helps demonstrate that your business is a distinct entity, potentially safeguarding it from being part of the marital property subject to division.
3. Explore mediation or alternative dispute resolution
In the divorce process, it can be beneficial to explore mediation or alternative dispute resolution methods that allow you to work collaboratively with your spouse. A neutral mediator can help you both come to a mutually agreeable settlement. This approach may preserve your business’s value and reputation, avoiding a contentious legal battle.
4. Plan for succession and business continuity
In the midst of a divorce, it is important to prepare for the possibility that it might affect your business. Establish a clear succession plan to ensure that your business can continue running smoothly during and after the divorce.
Although Massachusetts has one of the lowest divorce rates, sitting at 1 per 1,000 population in 2021, some marriages do not stand the test of time. For business owners, balancing an equitable divorce while securing the business requires proactive measures.
