Protecting a business during a divorce

The process of divorcing a spouse can often take more than an emotional toll on the individuals who are involved, as assets can get tied up between the spouses during the split, hurting a business if one exists.

Forbes provided an example with what could happen to a business during a divorce.

According to the news source, if a business is worth $6 million prior to marriage and is worth $12 million following the split, the former spouse of the owner could be entitled to half or more of the $6 million appreciation that occurred while the two individuals were together.

This asset division that favors the former spouse instead of the business owner can be prevented by the use of a marriage contract or a prenuptial agreement.

Forbes reported that a proper contract that is signed at the beginning of a marriage can prevent the $6 million appreciation from going to the spouse who doesn’t have any ownership, as the pre-marital property does retain its character during the marriage due to the right legal documents.

This may be a wise move, considering the divorce rate is 41 percent for first marriages in the U.S., according to Divorcerate.org.