People in Illinois likely know that almost half of marriages end in divorce. What people may not be aware of is how divorce can impact a business. When someone who owns a business is getting divorce, there’s a risk that the proceedings could impact their compensation or the way their company is run.
Financial impacts on a business
If the majority shareholder of a company is getting divorced, that can have a big effect. It’s possible that part of the shares will be transferred to the other spouse as part of a division of assets. One way of dealing with this is for the person involved to sell their stake. The way to prevent a situation like this is to draw up a prenuptial or postnuptial agreement.
Strategies for small businesses
Anyone who has started a small business or who works for a family operation should also consider implementing a prenuptial or postnuptial agreement. It’s always best to iron out issues about division of assets when the parties like each other and want the best for one another. However, there are other strategies it’s also prudent to consider.
For example, a lot of small business owners pay themselves an unusually small salary. This can be a smart move for an expanding company, but when it comes to a divorce, it’s a downside. It can mean that all the money someone has made is tied up in an asset that’s about to be divided rather than in their possession in a checking account.
A family law attorney may explain more about the ins and outs of the division of assets and advise their clients about how to proceed. The attorney may also be able to draw up a prenuptial or postnuptial agreement designed to protect a client’s business.