Most happy spouses do not want to think about the possibility of divorce. However, it can be important for business owners in Alabama to protect their company assets in case this happens. Creating a plan is not a way to try to deny a spouse a fair share of marital assets. Rather, it can prevent contentious issues that could negatively affect a business.
One way to do this is with a prenuptial agreement. This contract may establish the business as entirely separate property, or it may assign a percentage of the company’s value to the spouse. While the former solution allows the business owner to avoid the lengthy process of business valuation, it may be unfair to the other spouse.
Whether or not an agreement is in place, there are also conditions that may affect how much of a business a spouse may claim. If marital funds are used in the business, then it might not be possible to claim it as separate property. Business owners should keep careful records of all transactions. Furthermore, it’s wise to avoid mingling any personal finances with their business.
Having financial accounts in order is important even if there is a prenup. That’s because a spouse could challenge a prenup or a judge could decide the conditions are not fair. This could mean the couple will have to negotiate an arrangement for property division that involves the business after all. Rather than give the spouse partial control of the business, the business owner might opt to let the spouse keep another asset of equal value. An attorney could help a client throughout the divorce process.